Unions Oppose Taxing of Health Benefits

A majority of international unions have signed on to a letter to all U.S. Senators opposing any health reform proposal that would tax health care benefits saying, “…(W)e wish to express our strong opposition to any proposal that would pay for this reform by altering the tax treatment of employer provided health care.

During the presidential campaign, Barack Obama was sharply critical of Senator John McCain for wanting to tax health care benefits. Currently,administration officials have not ruled out such a tax which was floatedby Democrats in the Senate. On June 24th, at an ABC News televised townhall meeting, President Obama refused to rule out the taxing of health benefits.

(For list of unions signing letter, click here. For text of letter, click here.)

Vincent Panvini, Director of Government Relations for the Sheet Metal Workers’ International Association, who was instrumental in organizing the letter, said that opposition to any bill that included taxing of healthcare benefits would be “tremendous.” “You haven’t seen nothing yet,” headded.

According to a June 18th article in Roll Call

Sources say the White House political shop has been made well aware of union opposition to taxing health benefits, and that this may have helped drive tough statements by Vice President Joseph Biden and Health and Human Services Secretary Kathleen Sebelius over the weekend that were hostile to the idea.

Several labor officials said they expected many unions would oppose the overall health care bill if the new tax was in it as a pay-for. Many, including the AFL-CIO, find it difficult to support a measure that includes a provision many workers find so abhorrent….

On June 12, the half-million-member Laborers’ International Union of North America, which did not sign the initial letter, sent its own missive to Senate Finance Chairman Max Baucus (D-Mont.), stating that “any plan that taxes these benefits is dead on arrival.”

The AFL-CIO has not issued an official position, but union operatives say it is working behind the scenes to squash the idea.

Unions Signing Letter

Air Line Pilots Association
Amalgamated Transit Union
American Federation of Government Employees
American Federation of Musicians of the United States and Canada
American Federation of Teachers
American Postal Workers Union
Association of Flight Attendants
Association of Professional Flight Attendants
Confectionery, Tobacco Workers and Grain Millers International Union
Brotherhood of Maintenance of Way
Communications Workers of America
International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers International Association of Fire Fighters
International Association of Machinists and Aerospace Workers
International Brotherhood of Electrical Workers
International Brotherhood of Teamsters
Longshore and Warehouse Union
International Longshoremen’s Association
International Union of Police Associations
Metal Trades Department, AFL-CIO
National Air Traffic Controllers Association
National Association of Letter Carriers
Professional Aviation Safety Specialists International Union
Sheet Metal Workers International Association
Transport Workers Union of America
International Association of Plumbers and Pipefitters
United Auto Workers
United Mine Workers of America
United Steel Workers
United Transportation Union

TEXT OF THE LETTER

As you begin the important debate on reforming our nation’s health care system, we wish to express our strong opposition to any proposal that would pay for this reform by altering the tax treatment of employer provided health care.  We believe this would be a step in the wrong direction that could jeopardize the overall reform effort.

Over 160 million Americans receive their health coverage through the workplace either as an employee, dependant or retiree.  Both Congress and the President have said health care reform will build on what works and have assured Americans they can keep the coverage they have if they like it.  This makes good political and policy sense.

Eliminating or capping the tax exclusion for employer provided health care benefits — based on income, the premium level or a combination of the two — would threaten to undermine this primary source of health care coverage for most Americans.  First, it would remove a key incentive that employers have in providing the benefit.  This could lead employers either to change substantially or eliminate health care plans.  Second, if workers have to pay what amounts to a tax increase at possibly both the federal and state level, that could lead younger, healthier workers to pass up employer sponsored coverage for less comprehensive plans. This would drive up the cost of coverage for older, less healthy workers, leading to the unraveling of employer sponsored coverage.

Contrary to the arguments put forward by proponents of proposals to eliminate or cap the tax exclusion for employer provided health care benefits, this would not be an effective means for containing health care utilization and costs and curbing so-called “Cadillac” health care plans.  Instead, it would simply penalize persons who happen to be in plans that have higher costs because of factors beyond their control – that is, plans with more older workers, plans covering geographic areas with higher costs or plans sponsored by small businesses that have higher administrative costs.

Over the last several years, almost all of our members have sacrificed wages in bargaining in order to keep decent health care coverage. These hard working people are already in immense economic distress. Imposing what amounts to a tax increase upon them is unfair and very unpopular.

In 2009, a national survey done by Lake Research Partners shows that 80 percent of likely voters said they are opposed to taxing health benefits.  The President campaigned against eliminating the tax exclusion of health care benefits and the public overwhelmingly agreed with his position.  It’s obvious the American people want health care costs lowered, not increased.  They expect the Congress to make coverage more affordable, not less.  Any result to the contrary may undermine their support for the program.

For all of the foregoing reasons, we urge you to oppose any proposals to alter the tax treatment of employer provided health care.

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2 Responses

  1. [...] of America, United Steel Workers, and the United Transportation Union – are not eating waffles. These unions are all opposed to their health benefits getting taxed because in many instances they gave up other compensation in order to get good health care [...]

  2. When I originally commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is added I get several e-mails with the same comment. Is there any way you can remove me from that service? Thank you!

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