House Should Reject Another Deficit-Financed Tax Cut

For Immediate Release

The House of Representatives is scheduled to vote on a permanent repeal of the "Cadillac tax" on high-cost health insurance plans Wednesday, a major funding provision for the Affordable Care Act ("Obamacare"). This change would cost almost $200 billion from 2022 to 2029 and over $1 trillion in the following decade. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget: 

We are re-entering an era of trillion-dollar deficits, and Congress is considering yet another massive tax cut – it appears there is no end to this madness.

The Cadillac tax is one of the most important tools we have to control health care cost growth in the private sector. Repealing it will drive up health care costs while adding more than $1.2 trillion to the debt over the next two decades and reducing wages by trillions over that time period.

Repealing the Cadillac tax without a replacement would also remove one of the most important pay-fors of the Affordable Care Act, making it harder for advocates to describe that law as fiscally responsible and ultimately leading to more health care dysfunction and instability. 

We cannot keep passing tax cuts and spending increases at a time when debt is at near-record levels as a share of the economy. We should be doing the reverse.

Congress should not buck another hard choice and go back on a promise from the past. If Congress wants to remove the Cadillac tax, they should find a replacement that not only pays for the lost revenue but also controls the growth of health care costs. Economists and experts from the left, right, and center all agree on the need to limit expensive tax breaks for employer health care, which the Cadillac tax does. Lawmakers shouldn’t sacrifice smart policy for interest-group politics.

Our budgeting process is in chaos. Even when Congress makes a difficult choice, the next round of lawmakers is all-too-happy to repeal it. Congress should not revisit the past to make the debt worse; it should fix the numerous fiscal issues we are now facing today and in the future.

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For more information, please contact Patrick Newton, press secretary, at newton@crfb.org.