Health Benefits Tax Losing Steam

July 9, 2009 – An aggressive lobbying campaign led by the IAFF has dampened enthusiasm on Capitol Hill for paying for health reform by imposing a tax on employer-provided health benefits. The IAFF has argued that such a tax would disproportionately impact the nation’s fire fighters and other unionized workers.

The health benefits tax has been championed by Senator Max Baucus (D-MT), chair of the powerful Senate Finance Committee. Baucus is advocating that taxing benefits is the only way to generate enough revenue to pay for health care reform that would be palatable to members of both parties.

But Senate Majority Leader Harry Reid (D-NV) has told Baucus to find other ways to raise the necessary revenue. Reid says he has heard from several Democratic senators who oppose the tax after learning more about it from the IAFF and other groups. Underscoring Reid’s point, the chair of the Senate Budget Committee, Senator Kent Conrad (D-ND), told reporters that the Finance Committee needs to find alternative revenue sources, and some Republicans on the Finance Committee have also indicated that the tax is not at the top of their priority list.

“We may have turned an important corner,” says IAFF General President Harold Schaitberger. “Thanks to the leadership of our great friend, Harry Reid, this unfair tax now looks less likely than it did just a few days ago.”

Despite the steady drumbeat in opposition to the benefits tax, Baucus insists the issue is still on the table as he attempts to craft a bill that has bipartisan support. Of the three health care proposals being discussed on Capitol Hill, only Baucus’ plan is likely to garner Republican votes. Both Majority Leader Reid and President Obama have repeatedly expressed their desire for a bipartisan solution, but both have also expressed their opposition to the benefits tax.

The IAFF has led a group of approximately 20 unions that have met with senators on the Finance Committee over the past several weeks to educate them about the impact the tax on health benefits would have an working people. The groups have brought up various alternative funding mechanisms that would generate revenue more fairly without harming existing health plans.