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The Impact of the Cadillac Insurance Tax for Massachusetts
In October, the Boston-based Pioneer Institute published a new study on the impact that the tax on high-end “Cadillac” insurance plans, one of 20 new or higher taxes contained within Obamacare, will have on the commonwealth of Massachusetts.
With Massachusetts being one of seventeen states that are actively working to set up a state-based healthcare exchange by 2014, this new excise tax on high-end insurance plans, which goes into effect in 2018, will have a disproportionately adverse impact to Bay State residents. Given the fact that Massachusetts residents pay relatively high premiums for insurance coverage relative to other states, its residents will be among the hardest hit by this new excise tax.
The Pioneer Institute report used the most conservative estimate to accurately detail what the average person is most likely to pay in additional federal taxes during the first decade of implementation.
The tax does not discriminate between economic classes, and will reduce disposable income for the lower-middle class to the upper-middle class. In one of the scenarios outlined in the Pioneer Institute report, small business owners can expect to pay $86,905 in additional taxes per employee plan over 10 years. The economic impact of the excise tax is not limited to one demographic or industry. As the report notes:
Any profession that has robust healthcare benefits – construction workers, teachers, police, state and local public workers, and a majority of those on private insurance – will be immediately and significantly impacted by this tax.
The Pioneer Institute report is a reminder that, while the tax increases associated with the fiscal cliff are getting all of the attention, there are nearly a trillion dollars in additional tax increases from Obamacare that are scheduled to kick in over the next several years, five of which will saddle the economy with a $268 billion tax increase at the end of this month.