To agree with Harold Pollack the mere fact that John McCain’s health care plan during the campaign was bad is not a good reason to take curbing the tax exclusion of employer-provided health benefits off the table as a financing mechanism:
Well, no. The tax proposals Democrats are debating would be good politics and good policy. Most Americans, certainly most union members, would benefit from policies that impose modest taxes on generous employer-provided plans for affluent Americans. There are ways to do this that honor unions’ core concerns. One proposed option would cap the deduction at $6,780 for individuals and $17,280 for families beginning in 2013–but would only apply the cap on individuals with incomes exceeding $100,000 or families with incomes exceeding $200,000.
Such measures would hit a minority of union members–for example teachers married to high-earners in New Jersey. By and large, though, these are progressive tax increases on affluent professionals, and would impose very little additional tax on most rank-and-file union members. Even this highly constrained cap on the affluent would raise some serious cash, an estimated $162 billion over the next decade.
I would go a bit beyond this. Progressives should support labor unions. But progressives should also support progressive tax policy, not just the interests if members of labor unions as such. Most union members aren’t rich. But some are pretty well-off. For example, any family whose income exceeds $200,000 is earning much more money than the average American family. My father is in a union. So’s LeBron James. Just as high-earners who own small businesses are still high-earners who ought to be taxed like high-earners people, high-earners people who belong to unions are still high-earners who should ought to be taxed like high-earners.
It’s a good thing about labor unions that being in one is consistent with being an unusually prosperous American—the structural position of labor in a capitalist economy is such that people from all walks of life who don’t control the means of production can benefit from collective bargaining. But it doesn’t follow that tax policy should cater to the idiosyncratic interests of high-earning union members any more than it should cater to the idiosyncratic interests of high-earning people in general. Over the long-term, organizing health care around employment is a bad idea. And financing health care through giant hidden tax subsidies is also a bad idea. But eliminating the tax exclusion in one fell swoop would be unfair and politically infeasible. Curbing its applicability to high earners would, however, be a step in the right direction, raise some necessary funds for health reform, and help put us on the road to cost control.