If you impose a sudden 35 percent tax on something, are you likely to get as much of it? Go on, take a wild guess. On the day President Obama signed Obamacare into law, Verizon sent an e-mail to all its employees warning that the company’s costs “will increase in the short term.” And in the medium term? Well, U.S. corporations that are able to do so will get out of their prescription-drug plans and toss their retirees onto the Medicare pile. So far just three companies -- Deere, Caterpillar, and Valero Energy -- have calculated that the loss of the deduction will add a combined $265 million to their costs. There are an additional 3,500 businesses presently claiming the break. The cost to taxpayers of that 28 percent benefit is about $665 per person. The cost to taxpayers of equivalent Medicare coverage is about $1,200 per person. So we’re roughly doubling the cost of covering an estimated 5 million retirees.Just keep saying to yourself: "This is saving us money, This is saving us money..."
Monday, March 29, 2010
Mark Steyn takes note of another provision hidden in Obamacare: a stiff tax on corporate drug plans for retirees. The last time we created an entitlement was the 2003 drug benefit that gave companies a 28 percent tax break for such plans. But with the new tax, much of that benefit goes away: