November 6, 2009
Tax Foundation Director of Policy and Communications William Ahern Publishes Op-ed in Detroit News Online on Health Care Reform
"Baucus beats Pelosi on health tax policy"
By William Ahern
If sound tax policy were the guide of Congress, the choice would be easy between Sen. Max Baucus' health plan and the new House version from Speaker Nancy Pelosi. The Baucus plan would get the nod.
Both want to fund new government insurance subsidies for working-age, middle-income people, but their methods of raising the money to pay for them is quite different. The Baucus plan is sounder because his idea of taxing expensive health insurance policies, dubbed "Cadillac plans" in the press, will do much less damage to the economy than Pelosi's idea for a new surtax on income.
How would the government tax these Cadillac plans? Every health insurance policy whose premiums are higher than $8,000 for an individual ($21,000 per year for a family of four) would be taxed at the rate of 40 cents for every dollar over those thresholds.
