Health reform will end up taxing work

This Wall Street Journa l editorial clearly shows what the middle class is in for once Obamacare takes hold.

Those subsidies that will be paid to Americans who participate will, over the course of several years, act as a disincentive for those receiving it to work:

Central to Max Baucus's plan-assuming the public option stays dead-is an insurance "exchange," through which individuals and families could choose from a menu of standardized policies offered at heavily subsidized rates, provided that their employers do not offer coverage. The subsidies are distributed on a sliding scale based on income, and according to the Congressional Budget Office 23 million people will participate a decade from now, at a cost to taxpayers of some $461 billion.

Think about a family of four earning $42,000 in 2016, which is between 150% and 200% of the federal poverty level. CBO says a mid-level "silver" plan will cost about $14,700 in premiums, of which the family will pay $2,600-since the government would pay the other $12,100. If the family breadwinner (or breadwinners, because the subsidies are based on combined gross income) then gets a raise or works overtime and wages rise to $54,000, the subsidy drops to $9,900. That amounts to an implicit 34% tax on each additional dollar of income.

Or consider a single worker earning $20,600 and buying an individual "silver" policy with a premium at $5,000. Again according to CBO, if his income rises to $26,500, his subsidy plummets to $2,700 from $4,400 (including a cost-sharing subsidy that goes away). This is a 29% marginal tax; moving to other income levels yields increases in the neighborhood of 20% to 23% for both individuals and families. Jim Capretta, a fellow at the Ethics and Public Policy Center, calculates that when combined with other policies like the Earned Income Tax Credit that also phase out, the effective marginal rate would rise to nearly 70% at twice the poverty level.

This is not a difficult concept to grasp - especially for those families who might see a dramatic increase in their income due to a variety of reasons (wife going back to work, husband finishing advanced degree, inheritance, etc.).

This is a direct tax on the most productive members of society - the striving middle class who historically have been the engine of progress and wealth in America. Health care reform is a direct threat to that group's incentives to work harder and achieve success.

Yes - but at least they'll have insurance, right?




This Wall Street Journa l editorial clearly shows what the middle class is in for once Obamacare takes hold.

Those subsidies that will be paid to Americans who participate will, over the course of several years, act as a disincentive for those receiving it to work:

Central to Max Baucus's plan-assuming the public option stays dead-is an insurance "exchange," through which individuals and families could choose from a menu of standardized policies offered at heavily subsidized rates, provided that their employers do not offer coverage. The subsidies are distributed on a sliding scale based on income, and according to the Congressional Budget Office 23 million people will participate a decade from now, at a cost to taxpayers of some $461 billion.

Think about a family of four earning $42,000 in 2016, which is between 150% and 200% of the federal poverty level. CBO says a mid-level "silver" plan will cost about $14,700 in premiums, of which the family will pay $2,600-since the government would pay the other $12,100. If the family breadwinner (or breadwinners, because the subsidies are based on combined gross income) then gets a raise or works overtime and wages rise to $54,000, the subsidy drops to $9,900. That amounts to an implicit 34% tax on each additional dollar of income.

Or consider a single worker earning $20,600 and buying an individual "silver" policy with a premium at $5,000. Again according to CBO, if his income rises to $26,500, his subsidy plummets to $2,700 from $4,400 (including a cost-sharing subsidy that goes away). This is a 29% marginal tax; moving to other income levels yields increases in the neighborhood of 20% to 23% for both individuals and families. Jim Capretta, a fellow at the Ethics and Public Policy Center, calculates that when combined with other policies like the Earned Income Tax Credit that also phase out, the effective marginal rate would rise to nearly 70% at twice the poverty level.

This is not a difficult concept to grasp - especially for those families who might see a dramatic increase in their income due to a variety of reasons (wife going back to work, husband finishing advanced degree, inheritance, etc.).

This is a direct tax on the most productive members of society - the striving middle class who historically have been the engine of progress and wealth in America. Health care reform is a direct threat to that group's incentives to work harder and achieve success.

Yes - but at least they'll have insurance, right?