Feb 23, 2017

Republicans fear their own big tax increase

AP file photo

It's no wonder House Republicans are stuck on whether to limit the tax break for employer health coverage, as they've been discussing for their Obamacare replacement. The big problem: It's going to be hard for them to fight charges that it's a tax increase.

Republicans haven't filled in the details yet, at least publicly, but here's what happens when you try. The Congressional Budget Office did in December, and this is what it found for the most extreme scenario:

  • Deficit reduction by 2026: $426 billion.
  • People who would lose employer health coverage: 4 million.
  • Average tax break for individuals in 2026: $1,420.
  • Decrease in tax break from current law: $3,860.

You see where this is headed: Don't Tax My Health Care, a business-led lobbying coalition, is already calling that a $3,860 tax increase. There are other, more moderate options that would have smaller impacts, but it's not hard to see why the whole idea has become a political headache.

How they'll fight back: Republicans say their plan isn't going to look like the CBO scenario. They say they'd only target a small portion of the tax exclusion, which has the value of a $3.6 trillion subsidy over the next decade, and it would only affect a small group of people. And Ways and Means Committee chairman Kevin Brady has said he doesn't see it as a tax increase, because most people don't even know they get the tax break.

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Newspaper front pages via the Newseum

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