Excise Tax Rabbit Hole revision #387: No one claimed 80% of revenue would come from wage increases

[Hello_Kitty]

That's the latest from the HCR supporters and "Cadillac" tax apologists. I was just imagining it when I read this:

Some important aspects of the tax are widely misunderstood. For one thing, an October 20 press release cites the Congressional Joint Committee on Taxation (JCT) as finding that the total number of individual and family plans impacted by the excise tax grows to 34% and 31% respectively by 2019. These numbers overstate the tax’s impact (see the box on page 2). For another, as the JCT analysis shows, over 80 percent of the revenue generated would come not from the tax on insurance premiums itself, but from income and payroll tax revenue on the tens of billions of dollars of higher wages that workers would receive — as employers modified their health plans to avoid the excise tax and converted what they had been spending for health coverage in excess of the tax thresholds into higher wages and salaries. Indeed, one largely overlooked side benefit of the proposal is that by receiving higher wages and paying somewhat more in payroll taxes, most affected workers would qualify for higher Social Security payments when they retire.

http://www.cbpp.org/cms/index.cfm?fa=view&id=2957#_ftn11

I mean, that statement is still at the link but it's not really there because people are telling me that the JCT never said that and no one issued a press release saying they did and no one ever claimed that most of the revenue from the excise tax would come from increased wages so stop saying that.

[ProSense]

1. Is this supposed to be an argument against the tax?

...For another, as the JCT analysis shows, over 80 percent of the revenue generated would come not from the tax on insurance premiums itself, but from income and payroll tax revenue on the tens of billions of dollars of higher wages that workers would receive — as employers modified their health plans to avoid the excise tax and converted what they had been spending for health coverage in excess of the tax thresholds into higher wages and salaries. Indeed, one largely overlooked side benefit of the proposal is that by receiving higher wages and paying somewhat more in payroll taxes, most affected workers would qualify for higher Social Security payments when they retire.

[Hello_Kitty]

3. So you're saying the JCT does say that?

Gosh, you should have a chat with the folks who insist they didn't.

[ProSense]

5. I'm not interested in that. What about the point.

The statement clearly shows a benefit from the tax.

[Hello_Kitty]

7. Well see, ProSense, other people are denying that the JCT made the statement.

That's my point.

[dkf]

4. Hahaha. Like I believe social security will still be solvent when I retire at 67?

Funny.

[Oregone]

8. Wanna think about something ironic?

You hated and attacked the Wyden Free Choice amendment that would of *legislated* higher wages if a worker chose a lower cost plan, but you love and defend the free market trickle-down approach that depends on corporations increasing worker pay the equivalent amount that they may cut benefits by.

Its really mind boggling when you add that all together with the fact that you are posting on a liberal board! :)

This is the perfect panlgossian bill though, right? There is nothing wrong with it, correct? Is there any indefensible aspect of it, or simple misunderstandings of perfection that you need to shine light upon?

[dkf]

2. So what happens when premiums aren't converted into pay?

I also wonder if it is dollar for dollar. One dollar reduced from premium. One dollar we can tax as extra pay. Or did they assume a certain percent would just get cut?

[Hello_Kitty]

6. Here's John Kerry quoting Jonathan Gruber

Fifth, for the small sub-set of plans that are affected, the likely impact will be to increase workers' wages. MIT economist Jon Gruber recently found that the excise tax included in the Senate bill would lead employers to raise wages by $223 billion between 2010 and 2019. In 2019, wages for those affected by the provision will be higher by about $660 per household. I repeat -- raise wages. After spending years and years hearing from workers tired of seeing their unions forced to spend all of their energy at the bargaining table just to hold on to health care instead of negotiating for better wages, we now have a way to help increase wages and improve health care simultaneously.

http://www.huffingtonpost.com/john-kerry/why-this-progressive-is-s_b_414968.html

I'm not sure how that leads to $125 billion in tax revenue from those wages but, then again, the JCT never said that even though several people, including members of Congress have said they did.