Tax Lawyer's Blog

“As Gregor Samsa awoke one morning from a troubled dream, he found himself changed in his bed into a giant cockroach.”

 - First line of Franz Kafka’s The Metamorphosis -

Whoever coined the adage, “don’t tax me, don’t tax thee, tax the guy behind the tree,” knew whereof he spoke. 

WebCPA reports that President Obama and Congressional Democrats struck a back room deal with labor unions yesterday that effectively exempts union members from the luxury tax on so-called Cadillac insurance plans:

Under the new agreement hammered out by the White House and congressional leaders in a marathon negotiating session Thursday with labor leaders, the salary threshold for the tax will increase to $8,900 for individuals and $24,000 for families, according to The New York Times. Workers in high-risk occupations, such as police and construction workers, would have a higher threshold of $27,000 for family policies. The tax would not be imposed on state and local government employees and union members with collectively bargained health care plans until 2018, rather than 2013. Beginning in 2015, the price of dental and vision coverage would not be included in calculations of the threshold.

The deal will, of course, cost non-union taxpayers some money:

The changes will mean less revenue generated by the tax, $90 billion over 10 years as opposed to $149 billion. The White House and congressional negotiators intend to make up for the difference by including other revenue generators in the final bill. The House version of the bill includes a surtax on individuals who earn over $500,000 a year and couples earning over $1 million annually, but it is not clear if a modified version of this tax will be included in the final legislation.

The union deal is proof positive of the way some political parties will use taxation as a weapon of class warfare. If this doesn’t leave a taste in your mouth worse than Casu Marzu, you lack either a conscience or taste buds.

As long as the tax fell disproportionately on one class of Americans – the so-called rich – the other class of Americans -  the non-rich – lauded its virtues. But the moment the tax began to seep into their class, it’s virtues disappeared and, like Gregor Samsa, it transformed overnight into a giant cockroach.

Metamorphosis you can believe in.

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