Biden to propose capital gains tax as high as 43.4% for wealthy

Workers unlikely to see health tax relief

Ricardo Alonso-Zaldivar
Associated Press

Washington – — Don’t expect to see much relief from rising costs for workplace health coverage under a federal budget deal that postpones a widely feared tax on generous insurance plans, experts say.

The so-called Cadillac tax, the last major piece of President Barack Obama’s health care law, would be delayed two years, until 2020. It was meant to discourage extravagant coverage and help keep costs in check. But opponents including business and labor call it a tax on essentials.

Although the tax is still technically on the books, delay would represent a political setback for the White House. Just a few months ago top economic adviser Jason Furman warned that repeal or delay would have “serious negative consequences” for the health care system.

The Cadillac tax is 40 percent of the value of employer-sponsored plans that exceeds certain thresholds: $10,200 for individual coverage and $27,500 for family coverage. In its first year, it would have affected 26 percent of all employers and nearly half of larger companies, according to the nonpartisan Kaiser Family Foundation.

A divided Congress has reached agreement on a $1.1 trillion spending bill to fund the government for the 2016 budget year and extend $680 billion in tax cuts for businesses and individuals.

The House will vote on the tax package Thursday and the spending bill Friday. Senate passage of both measures, which the chamber’s top Democrat said he would support, would be Congress’ coda to a tumultuous 2015.

Some highlights:

■Family tax credits. Permanently extends recent changes to the $1,000 child tax credit that make it refundable to families with little tax liability; makes permanent a $2,500 college tuition tax credit and a more generous tax credit for low-income working families.

■Sales tax deduction. Permanently extends a deduction of state and local sales taxes in states without an income tax.

■Business tax breaks. Permanently extends several business tax breaks, including the research and development tax credit and a deduction for small business equipment purchases.

■Repeals the four-decade ban on exports of U.S. crude oil.

■Tightens several security requirements of the visa waiver program, which allows citizens of 38 countries to travel to the U.S. without visas.