If you impose a sudden 35 percent tax on something, are you likely to get as much of it? Go on, take a wild guess. On the day President Obama signed Obamacare into law, Verizon sent an e-mail to all its employees warning that the company’s costs “will increase in the short term.” And in the medium term? Well, U.S. corporations that are able to do so will get out of their prescription-drug plans and toss their retirees onto the Medicare pile. So far just three companies -- Deere, Caterpillar, and Valero Energy -- have calculated that the loss of the deduction will add a combined $265 million to their costs. There are an additional 3,500 businesses presently claiming the break. The cost to taxpayers of that 28 percent benefit is about $665 per person. The cost to taxpayers of equivalent Medicare coverage is about $1,200 per person. So we’re roughly doubling the cost of covering an estimated 5 million retirees.Just keep saying to yourself: "This is saving us money, This is saving us money..."
Monday, March 29, 2010
More money saving ideas from Obamacare
Mark Steyn takes note of another provision hidden in Obamacare: a stiff tax on corporate drug plans for retirees. The last time we created an entitlement was the 2003 drug benefit that gave companies a 28 percent tax break for such plans. But with the new tax, much of that benefit goes away:
3 comments:
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Are you familiar with what's actually going on here in terms of the tax law? They're closing a loophole that allowed a practice called "double dipping", where companies double up on getting subsidies on the same benefits that are exempted from any taxes. From what I gather, that's not usually allowed in tax law.
ReplyDeleteYou will probably want to start fact checking the blogs and opinion pieces you're citing from, because you've reproduced several false and misleading statements from other places (the Barnes quote being another example). Ending the tax subsidy and the practice of double dipping may be a bad idea, but that excerpt is very misleading.
Thomas,
ReplyDeleteFirst of all, I cite where my information comes from--in this case Mark Steyn. Your assertions are certainly material, but I have no idea where they originate.
Second, why would it matter to my point (or Steyn's) in what form the benefit came? Whether it was "double-dipping" or a straight tax deduction, its elimination would still have the net effect asserted by Steyn.
It matters a great deal, actually. There's a difference between closing a tax loophole, and there's a bigger difference between closing a tax loophole on something that's being actively subsidized, and there's an even greater difference between eliminating a poorly written law that allows employers to double count a subsidy, on the one side as income, and on the other as an exemption.
ReplyDeleteWhat's been happening is the government has been giving people a subsidy, they take the money, and then deduct that amount from their taxes, effectively double-counting the subsidy. The government sends a check to help pay for the drugs, and then (because of the screwy way the law was set up), you get to deduct that amount from your taxes.
The way that Mark Steyn presents it is deception by omission. No mention of the manipulation of tax law, no hint that this is an unusual exception corporations have been exploiting, just the suggestion that this is a regular old tax hike.