Last week, the Tax Foundation released a paper titled, “Reexamining the Tax Exemption of Municipal Bond Interest,” which argued that lawmakers should consider reforming the current tax treatment of municipal bond...
- The Tax Policy Blog
- Bill Introduced to Repeal Obamacare “Cadillac Tax”
Bill Introduced to Repeal Obamacare “Cadillac Tax”
Senate Finance Committee Member Pat Roberts (R-KS) has introduced a bill to repeal the excise tax on high-cost employer-sponsored health insurance plans.
Known as the “Cadillac Tax,” this Affordable Care Act provision levies a 40 percent marginal excise tax on high-cost employer sponsored health insurance plans starting in 2018. The purpose of this tax is reduce the generosity of employer sponsored healthcare plans by taxing benefits over a certain value.
Current law, which excludes employer-sponsored healthcare plans from taxation, encourages employers to compensate employees in generous healthcare plans over wages. This has been linked to over-utilization of healthcare due to the fact that individuals are less likely to face the true cost of their care and leads to higher healthcare costs overall.
Health benefits should be included in the tax base. There is no legitimate tax policy rationale to exclude them. However, the “Cadillac Tax” is a poor substitute for just eliminating the employer-provided healthcare exclusion. Eliminating this hole in the income tax would have at least given Congress additional revenue to lower rates for everyone.
Get Email Updates from the Tax Foundation
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.