Throughout his campaign, President Barack Obama repeatedly promised the American people: “If you’re a family that’s making $250,000 a year or less you will see no increase in your taxes. Not your income tax, not your payroll tax, not your personal gains tax, not any of your taxes.” Just 15 days into office, President Obama signed a bill expanding the children’s health insurance program that was paid for with a 156% tax hike on tobacco. Since slightly more than half of today’s smokers (53%) earn less than $36,000 per year, Obama’s first effort at expanding government’s role in health care also became his first broken promise.
But that first Medicaid expansion was minor league compared to the estimated $1.3 trillion health care plan Congress is considering now. And how is Obama planning to pay for his health care bill? Tax hikes. Including employer health care mandates, which as Heritage scholars James Sherk and Robert Book explain, are really just a tax on low-income workers:
Both the House and Senate drafts of health care reform include so-called “employer mandates” or “pay or play” provisions. These mandates require employers to pay higher taxes if (a) they do not offer health insurance, or (b) they offer it but have employees who decline it and instead use the government system.
The ostensible purpose of such a tax penalty is to discourage employers from dropping workers onto the taxpayer-subsidized government plan. The tax will pay a portion of the public’s costs when employees use the new government system instead of employer-sponsored insurance. However, the actual result will be lower pay and job losses, especially for low-income workers.
If Congress makes health coverage more expensive for employers, or requires new payroll taxes, employers will be forced to cut wages to make up the difference. Even if the law stated (as the House bill does) that employers could not cut pay directly to make up for the cost of health care, they will ultimately, somehow have to do just that.
Obama has broken his no-new-taxes-on-the-poor pledge once already. Will he do it again?