CLEVELAND, September 29 — In preparation for national bargaining that will begin late next year, the National Division has begun research on a number of subjects that must be considered as the BLET’s bargaining strategy is shaped. A review of the health care “reform” plan offered by Presidential candidate John McCain uncovered some facts that should worry BLET members and all railroad workers.
In contrast to the health care plan proposed by BLET-endorsed candidate Barack Obama, the cornerstone of the McCain plan is to end the tax deductibility of employer-sponsored coverage. This move would have a significant impact on our coverage under the national industry plan.
This year, each railroad’s total contribution toward the various elements of our national freight benefits package — including short-term disability — exceeds $15,000 per BLET member. Enactment of the McCain plan would subject the carriers to Medicare and Railroad Retirement Tier 1 and Tier 2 taxes on this sum. Depending upon an individual’s taxable income, carrier costs could rise over $3,000 per employee. This would be the equivalent of a 19.75% increase in the carrier’s cost.
Each member also would be subject to additional Medicare and Railroad Retirement taxes of up to $2,000 or more. BLET members would be further impacted in two other ways. First, the “pre-tax” status of the $166.25 monthly employee premium contribution and the carrier’s $40 monthly short-term disability contribution would end, and those contributions would have to be made with after-tax dollars. Second, the value of the carrier’s contributions would be included in each member’s taxable income.
For someone in the 25% marginal tax bracket — which includes single people with a taxable income in excess of $31,850, and married people filing jointly with a taxable income over $63,700 — the total income tax impact is over $4,500. For someone in the 28% marginal tax bracket — which includes single people with a taxable income in excess of $77,100, and married people filing jointly with a taxable income over $128,500 — the total income tax impact is over $5,100.
Promoters of the McCain plan point to $2,500 individual and $5,000 family tax credits that are included in the plan. However, it is unclear whether workers who receive employer-sponsored health benefits will be entitled to the tax credit. What is clear is that, in either case, the railroads’ costs will rise significantly, and your taxes also will increase steeply.
“John McCain claims that — as he puts it — ‘opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation,’” said BLET National President Ed Rodzwicz.
“In other words, he’s going to bring to the nation’s health care system the same changes that produced the current crisis on Wall Street and throughout the global financial sector,” added Rodzwicz. “This proposal is a disaster for BLET members, for American workers, and for the country.”