Wednesday, October 21, 2009

OBAMACARE'S TAX ON WORK

Subject: txt 1st hcare -

  • 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 percent 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 percent marginal tax; moving to other income levels yields increases in the neighborhood of 20 percent to 23 percent 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 percent at twice the poverty level.

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