What? Health Care Countdown: Senate Bill Could Hit Middle Class Hard

In fact, the Senate is counting on raising $120 billion in new taxes over the next 10 years, the majority of which will come from the middle class. Another $30 billion is expected to roll in from the actual tax on insurance plans, but far more comes from wages.

"This is a big tax on the middle class," said Douglas Holtz-Eakin, former director of the Congressional Budget Office, noting that 95 percent of people with the so-called Cadillac plans make under $250,000.

And that tax, critics say, will trigger a series of changes that will result in billions of dollars in new taxes on the middle class over the next decade. 

First, the tax will hit plans widely used by middle-class employees. The majority of workers with the high-value plans are union members and state government employees who are not considered wealthy, even though Obama advisers like to say the tax is aimed at benefits enjoyed by the likes of Wall Street bankers. 

"A lot of those folks that have Cadillac plans have Chevy wages. And that's what makes it, has made it, somewhat controversial and a real issue of contention," said Jim Kessler, vice president for policy with the non-profit think tank Third Way. 

Second, some say the tax will make many of the high-value plans too expensive and slowly cause them to disappear -- since employers could wind up cutting back on benefits they offer to avoid any passed-on price increase. 

Third, as those union members and other workers lose their health benefits, which are not taxable, the Senate assumes the lost benefits will be replaced by wages, which are taxable. 

Christina Romer, chairwoman of the White House Council of Economic Advisers, referred to this scenario during a speech in October, saying workers could end up with more "take-home wages" that are taxed.

http://www.foxnews.com/politics/2010/01/04/health-care-countdown-senate-health-hit-middle-class-hard/