Bob CollinsIf there’s one feature that has stood out in the health care debate, it’s the ability to argue in circles, the role of the federal government in health care offered by private business.
Today provides one such example.
The National Republican Congressional Committee today sent an alert to area media:
With the Democrats’ healthcare takeover now the law of the land, we’re slowly starting learn that these so-called “reforms” come at a steep price for the nation’s job creators. Construction manufacturer Caterpillar, which has a parts distribution center in Owatonna, is bracing for a $100 million tax increase, compliments of the Democrats’ healthcare bill:
Caterpillar Inc. said Wednesday it will take a $100 million charge to earnings this quarter to reflect additional taxes stemming from newly enacted U.S. health-care legislation. The world’s largest construction equipment manufacturer by sales, warned last week that provisions in the legislation would subject the company to federal income taxes on the subsidies it receives for providing prescription drug benefits for its retirees and their spouses. … “From our point of view, a tax increase like this cannot come at a worse time,” said Jim Dugan, a Caterpillar spokesman.
(Bob Tita, “Caterpillar Takes Hit on Health Care,” Wall Street Journal, March 25, 2010)
These tax increases, which are part of a bill that Rep. Tim Walz proudly supported, come at a time where many businesses, especially manufacturers, are struggling to make ends meet. With Tim Walz heading home this weekend to kick his spin machine into overdrive, it’s important to keep in mind that Walz’s healthcare takeover will put the squeeze to Minnesota employers.
Reality check. It’s true that the companies are being taxed under the legislation. But the complaint challenges the underlying argument of health care opponents that the federal government shouldn’t be messing with people’s health care.
Caterpillar — and some other large companies such as John Deere and Boeing — get a federal subsidy — about $665 per retiree — to provide prescription drug benefits to retirees that are far more attractive than what Medicare recipients get. Where does the money come from? The U.S. taxpayer.
It’s free money that corporations get from the federal government and under the health care law, it will now be taxable as income.
There are arguments for the subsidy. It keeps retirees off a Medicare Part D plan. And taxing it may force companies to cut benefits to retirees, eliminating anticipated revenue under the tax.
But in opposing the subsidy’s taxation, Republicans are faced with turning their back on a principal principle upon which much of their opposition to the health care law is based in the first place — that taxpayers shouldn’t be paying for health care provided by private corporations.
