A National Association of Manufacturers study released this week on the employee benefits tax, also referred to as the “Cadillac tax,” finds disastrous consequences for manufacturers and the middle class. According to the study, titled Heads Up: A Tax on Employee Benefits Is Coming Your Way, job losses from the tax could total 2.6 million by 2035, and real personal income in 2014 dollars would be reduced by almost $3,800 per household. The study finds the economic tax burden would reduce GDP by 1.7 percent by 2035.
This study examined the economic impact of the Affordable Care Act’s 40 percent tax on employee health care benefits, set to go into effect in January 2018. While the tax is intended to target high-end insurance plans, it will hit the middle class as well as employers across the board. The accelerating nature of the tax will prompt many employers to continually increase cost sharing and/or eliminate benefits. On-site clinics, on-site pharmacies, wellness programs, flexible spending accounts and health savings accounts could all be in jeopardy. Virtually all employers would end up facing the tax at some point.
“This tax is just one more example of how Washington has failed workers,” said NAM President and CEO Jay Timmons. “It will significantly add to the cost of manufacturing in America, making it far more difficult for manufacturers to continue to provide benefits when they must compete with manufacturers overseas. Health care costs and regulations are already a top concern for manufacturers; this tax makes the situation worse.”
Earlier this year, the NAM released a poll that showed a majority of Americans oppose the tax. Just last week, 90 senators voted to repeal it. With virtually every manufacturer facing the consequences of the employee benefits tax, now is the time for solutions.
For more information, go to www.nam.org/ebt.
Associated Industries of Missouri is the sole official designated partner of the National Association of Manufacturers in Missouri.