Unions’ Health Benefits May Avoid Tax Under Proposal

[Omaha Steve]

http://news.yahoo.com/s/bloomberg/20090626/pl_bloomberg/advu77pzr7k4

Ryan J. Donmoyer and Holly Rosenkrantz Ryan J. Donmoyer And Holly Rosenkrantz – Fri Jun 26, 3:13 pm ET

June 26 (Bloomberg) -- The U.S. Senate proposal to impose taxes for the first time on “gold-plated” health plans may bypass generous employee benefits negotiated by unions.

Senate Finance Committee Chairman Max Baucus, the chief congressional advocate of taxing some employer-provided benefits to help pay for an overhaul of the U.S. health system, says any change should exempt perks secured in existing collective- bargaining agreements, which can be in place for as long as five years.

The exception, which could make the proposal more politically palatable to Democrats from heavily unionized states such as Michigan, is adding controversy to an already contentious debate. It would shield the 12.4 percent of American workers who belong to unions from being taxed while exposing some other middle-income workers to the levy.

“I can’t think of any other aspect of the individual income tax that treats benefits of different people differently because of who they work for,” said Chris Edwards, director of tax policy studies at the Cato Institute, a Washington research group that often criticizes Democrats’ economic proposals. Edwards said the carve-out “smacks of political favoritism.”

Baucus, a Montana Democrat, is proposing to tax Americans whose health insurance is valued at a higher rate than what is offered to federal employees. About 40 percent of insured Americans have costlier benefits, and Baucus has said he is trying to set the level at which taxes would be imposed high enough so fewer people are affected.

‘Gold-Plated’ Plans

The policy is aimed at so-called “gold-plated” plans such as the $40,543 in health benefits paid to Lloyd Blankfein, chief executive of New York-based Goldman Sachs Group Inc., the fifth largest U.S. bank by assets.

It can also affect companies such as Henderson, Nevada- based Zappos.com, where workers’ $11 per hour pay is supplemented by employer-paid health insurance plans worth about $7,500. Federal workers’ health benefits are worth about $4,200 for individuals and $13,000 for families.

FULL story at link.

[ProgressiveProfessor]

1. They would have to do something like that or it will never pass

Many union plans are better than the current Fed programs (same with retirement plans)

[lindisfarne]

2. Misleading title:"any change should exempt perks secured in existing collective-bargaining agreement

This would be fair because unions often forgo higher wages for better benefits.

After contracts in force at the time health care reform passes expire, unions will need to look at stopping trading better benefits for higher wages.

[justanaverageguy]

3. no it's not fair

Although not in a union, I have foregone, just as many others have, the potential of higher pay for better benefits as well. Either tax everyone by the same standards or don't tax them at all. This exemption is bullshit. It is a complete and total gift for all of the money and support given. It's not good when it's done with oil companies and it's not good when it's done with labor. For anyone on this board to think otherwise on this issue, in my humble opinion is being as hypocritical as any Republican has ever been.