Thursday, February 4, 2010
Wall Street Journal op-ed, Another Obama Tax Hike: The Senate Health-Care Bill Would Raise Effective Marginal Tax Rates on Lower and Middle-Income Singles and Families up to 41%, by Douglas Holtz-Eakin (Former Director, Congressional Budget Office; Fellow, Council on Foreign Relations) & Alex Brill (American Enerprise Institute):
[The Senate health care bill raises] to shocking levels the effective marginal tax rates (EMTR) on lower and middle-income singles and families--with the government taking up to 41% of each additional dollar. ...
The solid line shows the EMTR based on income tax law prior to the health-care bill (it excludes the impact of the payroll taxes). The dashed line displays the damaging increases in the EMTR assuming the health insurance premium subsidies contained in the Senate health-care bill and insurance cost estimates provided by the Kaiser Family Foundation. As a family's income rises above 133% of poverty, Medicaid eligibility will be eliminated but a family that does not receive health insurance from their employer will receive a subsidy to purchase health insurance in the "exchange." In turn, however, as their efforts yield higher income, subsidies are clawed back or effectively taxed away. The current law policies show that there are already some lower income families facing EMTRs above those in the middle class. But the barrier to success imposed by health-care reform is even more striking. According to the Congressional Budget Office, about 20 million people would receive a subsidy to purchase insurance through an exchange and thus face a higher EMTR.