|
For Immediate
Release
4/24/07
CONTACT:
Joe Pittman
(Senator White)
(717) 787-8724
Stacey Connors
(Senator Browne)
(717) 787-1349
Governor's Jobs Tax Needs "Act of Congress"
Plan
faces high legal hurdle, has "no support" in the Legislature
While it would
take an "act of Congress" for the Governor's proposed "Fair Share Tax"
to avoid a legal challenge, the issue may be moot since the plan seems
to have no support in the Legislature.
"I haven't met a
single legislator who is going to vote for this tax. We need to dispose
of it and move on," said Senator Jake Corman, Senate Republican Policy
Committee Chairman, during a joint public hearing on Tuesday (April 24)
by the Senate Banking and Insurance Committee and the Senate Finance
Committee to hear testimony on the legality and practicality of Governor
Rendell's proposed tax on employers to support his universal health care
plan.
The committees
heard testimony from a national expert regarding a recent case involving
a mandated health benefits program in Maryland. In January 2007, the
U.S. Court of Appeals for the Fourth Circuit affirmed a decision that
invalidated Maryland's program citing that it clashed with the Employee
Retirement Income Security Act of 1974 (ERISA).
Todd Anderson,
Outside General Counsel for Retail Industry Leaders Association (RILA)
said the Fourth Circuit Court's decision would directly apply to
Governor Rendell's tax proposal as it is written in Section 7203 of
House Bill 700.
"This judicial
ruling makes it clear that employer health plans are governed by federal
law, not a patchwork of state and local laws," Anderson said. "RILA
believes the Fourth Circuits' decision sends a strong message that bills
containing 'fair share' provisions that are under consideration in other
states, such as HB 700, are also pre-empted by ERISA."
In response to a
question from Banking and Insurance Committee Chairman Senator Don
White, Anderson said that literally an "act of Congress" addressing
ERISA would be required in order for Gov. Rendell's so-called "Fair
Share Tax" to pass legal muster.
Rosemarie Greco,
Director of the Governor's Office of Health Care Reform said the tax,
which is projected to cost Pennsylvania employers $317 million annually
by year five, was different from Maryland's plan because it would not
consider the amount companies spend on health care.
"It is a
straight-forward tax on employers," she said. "The Maryland law
specifically required employers to spend 8 percent of payroll on health
benefits or pay the difference to the state. Our proposal imposes a 3
percent tax on employers. Period."
Senator Jane
Earll told Greco that she took umbrage with the Director's testimony
which insinuated that the legislators were simply out to sabotage HB
700. "I believe we have some serious concerns and I believe we have a
responsibility to listen to these legal opinions," Senator Earll said.
The fact that
the Administration hasn't completed legal reviews of the tax, nor
addressed solvency questions about the universal health care plan raised
a number of concerns from Senators at the hearing.
Senator White
said that since the Maryland case was on-going since last year, he was
incredulous that the Administration had not completed its legal review
regarding the tax and ERISA.
"If this was a
serious proposal, wouldn't it have been appropriate to seek the
expertise of outside counsel before you rolled it out?" Senator Corman
asked Greco.
Finance
Committee Chairman Pat Browne echoed those sentiments, adding that the
legal review should also extend to the Uniformity Clause of the
Pennsylvania Constitution, which states that taxes can't be imposed for
"populist" reasons.
"In form, we are
trying to structure something that avoids ERISA, but in substance, that
is impossible," said Senator Browne.
Senator White
and Senator Pat Vance questioned the fiscal aspects of the Governor's
proposal.
"When Governor
Rendell proposed the Fair Share Tax, it was billed as a 3 percent tax on
an employer's payroll that does not offer employees 'acceptable' health
care coverage," A few weeks later, the Legislature learned the plan
actually calls for the tax to be increased by approximately 16 percent
after the third year and all employers will be assessed the tax and be
burdened with the need to seek a refund if their coverage is deemed
'adequate'," Senator White said.
Senator Vance
also questioned the ambiguity of the language regarding what the
Administration regarded as "qualified" health care.
"How can an
employer determine if they are subject to the tax if the language of
qualified health care is undefined?" Senator Vance asked. She also
raised serious concerns about projections that show that even with the
proposed tax and its increase from 3 percent to 3.5 percent the
Governor's universal health care plan is expected to be under-funded in
the future.
"How can we
consider a program that is insolvent from the start?"
Print this page
E-mail this page
|
