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Business, Labor Align To Call For Cadillac Tax Repeal

The tax would be implemented as part of the Affordable Care Act.

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The U.S. Chamber of Commerce and the AFL-CIO don't tend to agree on much politically.

But the business group and labor union are united in their support for legislation to repeal a tax that will be implemented as part of the Affordable Care Act, according to a report in The New York Times.

The 2010 Obamacare law included a new excise tax on employer-sponsored health plans that exceed government standards. The so-called "Cadillac tax" will equate to 40 percent of the annual difference between an employer plan and the government rate, which is set at $10,200 for individuals and $27,500 for families.

The tax won't take effect until 2018, but the issue is already hindering labor contract talks that will extend through that year. The Times report, for example, details a fight over benefits at a Washington State paper mill that could save millions for KapStone Paper and Packaging but cost thousands more for its employees.

Supporters argue that the tax would rein in overly generous health plans and start to curb the tax implications of employer-sponsored coverage.

But the looming deadline also prompted increasingly vocal opposition from both sides of the political aisle. Critics allege that health care costs are determined by a variety of factors and that the tax would unfairly punish certain businesses and employees.

In addition, the tax will likely affect more and more plans in coming years because the government rates keep pace with inflation instead of with faster-growing insurance rates.

House Democrats introduced a bill to repeal the excise tax that gained the support of 130 co-sponsors, along with groups like the U.S. Chamber and AFL-CIO. Their Republican colleagues, meanwhile, offered an alternative repeal measure with nearly 70 co-sponsors.

“There is very significant bipartisan support,” Rep. Frank Guinta of New Hampshire, the author of the GOP bill, told the Times.

A new coalition called the Alliance to Fight the 40 also plans an official launch this month to push for repeal.

“Business and labor are united in their opposition and concerned about the impact of the tax,” said Katy Spangler of coalition member the American Benefits Council.