A Cadillac tax is named after the famous luxury car, Cadillac. It refers to the two-year delay on expensive employer health plans from the employers to their employees.
According to the News, President Obama has taken the initiative to view the Cadillac Tax and make possible adjustments to it. In order to take care of the tax system in the long run, the possible adjustments in the Cadillac tax may cause weakness in the revenue generation and lower health care costs.
The Cadillac Tax is highly disliked by the business industry, trade unions and politicians. On the contrary, various Economists are in the favor of the Cadillac tax.
Why? According to the economists, since the employer-sponsor health insurance does not add up to the taxable income, a Cadillac Tax can help limit the health care expenditures easily. This way, the businesses and their employees will have a reason to lower their spending.
In all states of USA, the healthcare payment is made by the employer. The Cadillac Tax increases if the amount exceeds from the given fixed figures. For 2018, these are the amounts:
• Individual plans: $10,200
• Family plans: $27,500
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