Jared Bernstein: The Cadillac Tax, Part 2: My critics made some good points…but I still think I’m right

Jared Bernstein on The Cadillac Tax, Part 2: My critics made some good points…but I still think I’m right.

In a piece I recently posted up here, I made four arguments in support of the so-called Cadillac tax, the 40 percent excise tax on health care premium costs above caps set by the Affordable Care Act (the tax is scheduled to kick in by 2018).

First, at least initially, the vast majority of premium costs will be below the caps, meaning they won’t get hit by the tax. Second, by creating a strong incentive to hold down premium costs, the tax is likely to help slow the growth of premium costs going forward. Third, as employers put less compensation into health benefits, they’re likely to put more in wages. Fourth, the tax is expected to raise $90 billion over the next decade, so those who would get rid of it need to come up with a replacement, ideally one with some of the same incentives just noted.

You’ll rarely win friends defending a tax, and I got predictably critical responses. While some were from grumpy partisans who hate Obamacare, taxes, and especially taxes that fund Obamacare, others were sensible and deserve attention. Part of the problem was shorthand on my part and so I’ll elaborate a bit more here. And on point three above–the wage point–I was too dismissive of a legitimate concern.

It's posts like these that make me like Bernstein more and more. There are details and there is a willingness to listen to legitimate arguments. I tend to see that more on the left and rarely see it on the right (e.g., on the current Iran deal, or Benghazi or Obamacare). Sure Rand Paul has softened on a few things, but he's usually so far out there to begin with he still ends up way to right for me. I don't think Trump has ever admitted that some counter-arguments might be legit.