these "Cadillac" plans (look at the emotional rhetoric used!)
Which, FWIW, is not in the law or coined by anyone in politics.
You know what will happen, of course. The "rich" people will have their compensation restructured to have a $27,500 health insurance allowance, exactly, and the balance will be given in other compensation to avoid the tax.
Which will be taxed at a normal rate, as opposed to the 0% tax that currently exists on health care benefits.
Let's look at the numbers directly. $40,000 was a number thrown about as the annual premium on a top-of-the line plan (the plan offered to some banking CEO, IIRC). A 40% tax on the amount over $27,500 is $5000. A $5000 tax on $40,000 is 12.5%, which sounds perfectly reasonable to me, especially for someone who is likely to be well within the top percentile of wage earners, and is almost certainly below the income tax rate they would be paying on that same income.
Also, part of the point is to get people to move from these plans to other forms of compensation. For the most part, these plans are seen as tax dodges with very little additional health-care benefit.
Previous Topic
Index
