NCPA - National Center for Policy Analysis


September 18, 2009

It's not every day that you hear a Democratic senator charge that a fellow Democrat is proposing to raise taxes on the middle class, but that is what happened on Tuesday when Sen. Jay Rockefeller (D-W.Va.), ripped into the health care bill developed by Sen. Max Baucus (D-Mont.), the chairman of the Senate Finance Committee.

  • The Baucus proposal would impose, starting in 2013, a 35 percent excise tax on insurance companies for "high-cost plans" -- defined as those above $8,000 for individuals and $21,000 for family plans.
  • Health economists believe a tax on high-priced benefits could help slow the growth of health costs by making consumers more sensitive to prices.
  • The tax contemplated by Baucus is also a big revenue raiser; it is expected to raise $200 billion, money that Baucus is hoping to use to pay for subsidies for the uninsured.

Given how much money this kind of tax can raise, Rockefeller says he understands why it is "tempting."

The West Virginia Democrat worries, however, that a lot of middle class workers, like the coal miners in his state, will end up facing "a big, big tax" under the Baucus bill because they currently enjoy generous employer-provided health care benefits which they receive tax free.

Referring to Baucus, Rockefeller said, "He should understand that (his proposal) means that virtually every single coal miner is going to have a big, big tax put on them because the tax will be put on the company and the company will immediately pass it down and lower benefits because they are self insured, most of them, because they are larger.  They will pass it down, lower benefits, and probably this will mean higher premiums for coal miners who are getting very good health care benefits for a very good reason.  That is, like steelworkers and others, they are doing about the most dangerous job that can be done in America."

Source: Teddy Davis, "Dem Senator Warns of 'Big, Big Tax' on Middle Class in Baucus Bill," ABC, September 16, 2009.

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