Thursday, January 25, 2018

Whack Whack Cadillac

Kicking the can down the road is very bipartisan. Especially when the can is going to be used to fill full of our tax dollars. This has become a key feature of Obamacare. Nothing has been kicked further than the Excise Tax on employer sponsored plans - commonly referred to as the Cadillac Tax.

The Caddy Tax imposes a 40% tax on employer plan premiums that exceed a certain threshold. Originally, this tax was to be implemented beginning in 2013. According to that CBO score the government would have generated $149 billion dollars between 2013-2019. In fact, under the original score $85 billion would already have been generated under the law.

However, with unions and other business lobbyists turning up the pressure, Democrats in the House pushed a reconciliation bill that included an amendment to the Caddy Tax pushing the start date to 2018. (Note: it also increased the threshold substantially) Because of the shoddy way this bill was passed then addressed through a one party railroad, the end result was revenue on paper. Revenue that unions knew would never, ever be collected.

Under the reconciliation bill the new Caddy Tax revenues were to begin this year and generate $12 billion with another $20 billion next year. At least that is what was supposed to happen based on 2010 scoring. Instead we saw a bipartisan agreement in the 2015 spending bill that pushed the Caddy Tax another two years out with a new start date of 2020.

The latest installment came this past week with the government shutdown and subsequent passage of a short term spending bill. Once again we have bipartisan agreement of an additional two year delay pushing the Caddy Tax out to 2022.

The Caddy Tax has now been delayed almost ten years. One would think that such bipartisan support of postponing a tax that is despised by so many would be easy to repeal. Many groups like Fight The 40 have been working to do just that.

But here's the truth. Congress needs the Caddy Tax. They need it for the revenue on paper. When CBO scores in ten year windows it shows an accounting sleight of hand that many of us don't know. It shows as revenues - whether collected or not.

Having IOU's is how they trick us in to believing that they are good stewards of our tax dollars. Sad truth is they simply don't care about spending your money. They care about you voting to re-elect them. Which is why kicking the can down the road is the avenue of choice for those we elect in DC.

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