Corporate complaints over loss of tax write-offs under insurance reform unfounded

No one said it would be pretty. But something had to change.

Under the health insurance reform plan signed into law by President Obama on Wednesday some corporations will have to start paying taxes on a federal subsidy they receive to provide prescription drug benefits for their retired employees. That subsidy is worth $1,330 per retiree.

Caterpillar Inc. calls the loss of the tax break a “tax increase.” The White House calls it “closing a loophole.” All semantics aside, it’s a good thing when the government makes an attempt to balance the burden and make corporations pay for the many hand-outs they receive courtesy of taxpayers. 

While receiving state and federal tax breaks right and left, Caterpillar, John Deere, Boeing, MetLife and other corporations have started whining about having to pay taxes on their federal drug grants next year. But since the law also provides $10 billion in support for businesses with early retirees, the whole thing could turn out to be a wash. Some are expected to come out ahead.

In any case, Caterpillar, as just one example, projects a fiscal 2010 profit of $1.3 billion. Paying its one time charge of $100 million back to the national coffers in the form of taxes on a federal subsidy does not seem remotely harsh.

More than 3,500 companies take the tax break as an incentive to provide drug benefits. Most of them have further short-changed America by gobbling up state and federal incentives while sending millions of our jobs to countries where labor is cheap and health care is universal (AKA “socialized” and “government-run”).

If this is a glimmer of corporate welfare change that’s coming to America I hope to see more of it.