White House defends Obamacare tax as a way to boost wages

By Pete Kasperowicz, Pete Kasperowicz

Published December 20, 2015

The White House on Tuesday defended Obamacare's huge tax on pricey healthcare plans as a way to boost wages for workers, as Congress was considering a plan to delay the tax for two years.

The so-called Cadillac tax will impose a 40 percent tax on employer health plans that cost more than $27,500 for a family, or $10,200 for an individual. The tax takes effect in 2018, and is a major funding component for Obamacare, but White House spokesman Josh Earnest said delaying it or repealing it would also hurt wages.

"We know that the application of the Cadillac tax would have the effect of giving employers an incentive to raise wages," he said.

"Right now, a fancy healthcare plan, even one that is excessively larded with benefits that in some cases people never even use, is a way for employers to offer compensation that doesn't actually benefit in full their employees," he added.