James Capretta explains in a National Review Online column why he doesn’t want to see the Obamacare Cadillac tax killed … at least not yet.
Some Republicans are eyeing repeal of Obamacare’s “Cadillac tax” as part of a larger plan to roll back some of the law’s most unpopular and unworkable provisions. It is certainly a good idea to move legislation this year that begins to push back against Obamacare’s many excesses. But the Cadillac tax is the last provision Republicans should be targeting for repeal right now, and they certainly shouldn’t repeal it without replacing it with something more sensible.
The Cadillac tax, known officially as the “excise tax on high-cost employer-sponsored health coverage,” imposes a 40 percent tax on the cost of employer plans exceeding specified thresholds. The tax goes into effect in 2018, and the initial thresholds are $10,200 for coverage for individual workers and $27,500 for coverage of workers and their families. The tax is to be paid by the employers. …
… So there’s a lot not to like about the Cadillac tax. But that doesn’t mean the GOP should be targeting it for repeal this year. Again: The Cadillac tax is going to operate much like an upper limit on the tax preference for employer-paid health care, which is a good thing. The GOP would be crazy to repeal it without also putting in its place a more rational and straightforward tax-limitation provision.
In fact, repealing the Cadillac tax would play right into the Democrats’ hands. The Cadillac tax is among the least popular provisions in the law because both labor unions and businesses realize it will work as intended. If the GOP helps to kill this tax, the rest of the law will become more entrenched, and there will be very little reason for unions or employers to ever support other changes to Obamacare.
