David Freddoso
Washington Examiner
3/31/2010
We turn to the Wall Street Journal for the math on what it will cost to raise taxes on corporations’ retiree prescription drug coverage. This is the provision that has caused several corporations to take markdowns recently.
The bottom line: by closing this “loophole” — which was originally created to dissuade companies from dumping retirees’ prescription costs into Medicare Part D — the government could lose more than five times what it brings in.
The Employee Benefit Research Institute calculates that the 28% subsidy on average will run taxpayers $665 in 2011 and that the tax dispensation is worth $233. The same plan in Medicare costs $1,209. Given that Congress has already committed the original sin of creating a drug entitlement that crowds out private coverage, $233 in corporate tax breaks to avoid spending $1,209 seems like a deal. If one out of four retirees is now moved into Medicare, the public fisc will take on huge new liabilities.
Emphasis mine. Such corporations have four main options: drop or reduce prescription coverage for their retirees, pass new costs along to cash-strapped consumers, lay off workers, or simply bear the tax losses and pass them along to shareholders.
Not good options, are they? As it sucks more and more money out of employers like Caterpillar, John Deere, AK Steel, AT&T, etc., (this provision alone will cause an estimated $14 billion in sudden losses), can we start referring to ObamaCare as the “un-stimulus?”
