The Joint Select Committee on Deficit Reduction—or “Super Committee”—is working on Capitol Hill to craft a bill aimed at slashing the U.S. budget deficit by $1.5 trillion or more by 2021. The U.S. Congress must pass a deficit reduction bill by January 2012 or there will be mandatory reductions across the board. Several proposals are under consideration, one of which would raise income taxes or reduce tax preferences that exist today on employer-sponsored health care and defined contributions to 401(k) retirement plans. This means they will tax your health care benefits’ value as income.
It is time for all TCU members to tell Congress that these tax increases are not acceptable to you. Take action now: tell your Member of Congress and your U.S. Senators that a tax on your employer-provided health benefits and reducing your defined contribution limit is nothing more than new taxes on your negotiated benefits. These taxes should not be used to reduce the deficit! The Super Committee must act by November 23, 2011, so you must make your voice heard now.
BACKGROUND—The Budget Control Act of 2011, signed into law in August, outlined $1 trillion in U.S. government budget cuts, and included a framework to address additional long-term deficit reductions. TCU and the Machinists have been following deficit-reduction talks closely, and we are very concerned that, in the name of deficit-reduction, Congress may look to increase revenue by placing new taxes on TCU members and millions of other middle-class Americans.
One proposal that is being discussed is the reduction of government “expenditures” related to the tax-favored status of health and retirement benefits. Specifically, this could mean taxing employer-provided healthcare benefits, which could lead to higher out-of-pocket costs for TCU families and eventually look at dropping coverage. This proposal would radically alter the current tax exemption for employer-provided health care benefits, which is a broad-based tax benefit for all working Americans.
Also under consideration is the lowering of the Internal Revenue Code Section 415(c) defined contribution limit on 401(k) and other defined contribution retirement plans—vehicles for personal financial security and national economic growth. For most Americans and a large majority of TCU members, their 401-k plan is their only employer-sponsored retirement benefit. In deficit-reduction proposals under current consideration, contributions to these plans would be dramatically reduced.
Both of these proposals are extremely unwise and constitute an outright attack on TCU members’ negotiated benefits.
The work of the Super Committee is already underway, and the members must report out a bill, which is not subject to amendment, to the full U.S. House and Senate by November 23, 2011 for an up or down vote by Congress by December 24, 2011.