Will Obama fight for Cadillac tax?

Photo: Associated Press

Finally, the White House has something to say about the “Cadillac tax.”   

According to The Hill, Jason Furman, chairman of the Council of Economic Advisers, spoke on Monday against plans hatched by bipartisan forces in Congress to repeal the controversial provision of the Patient Protection and Affordable Care Act before the end of the year.  

“It’s really important to us that we don’t see that measure repealed, and we will work hard to prevent that from happening,” he said at a forum hosted by Politico.  

In recent months, the president and his surrogates have remained largely silent as more and more members of the Democratic party, including Hillary Clinton, Bernie Sanders, Harry Reid and Nancy Pelosi, have voiced support for undoing the tax, which levies a 40 percent tax on every dollar spent above $10,500 on an individual health plan or $27,500 for a family plan.  

Furman, along with many other economists who supported PPACA, sees the Cadillac Tax as an important incentive to rein in rising health spending. Economists across the political spectrum have long criticized the U.S. tax system for treating health benefits differently from other income. That encourages employers to compensate workers with generous benefits, rather than wages, because the former are exempt from taxation.  

Of course, workers who currently enjoy generous health care packages, and employers who are currently not paying taxes on them, are not excited about the change. Business groups and unions have thus pressured both parties to kill the tax.  

Although important voices on the left –– notably organized labor ––have opposed the tax from the beginning, their differences with Obama have not brought them into open confrontation with the White House. But in a rare example of bipartisanship, Democrats are now working with Republicans to insert a provision repealing the Cadillac Tax into an end-of-year tax bill.   

It’s unclear to what extent the Obama administration will fight the effort. Will the president veto the whole bill if it includes the Cadillac Tax repeal, risking the very real prospect of a veto override from Congress?