70 percent tax on work

[Azazello1313]

 

President Obama said Monday that the debate on health care has gone on long enough, and now is the time to pass something.

 

But does Congress, let alone the public, really understand what these bills would mean for the health sector and the wider U.S. economy? In 1994, the Congressional Budget Office (CBO) issued a lengthy assessment of the Clinton administration’s proposal, covering everything from its distributional consequences to the budgetary treatment of its various moving parts. The public should get the same kind of thorough review of what Obamacare would mean before Congress takes any further steps toward passage.

 

For instance, there hasn’t yet been a thorough analysis of what the bills moving in the House and Senate would mean for work incentives among low-wage families. A cursory review indicates that Obamacare would impose a massive new implicit tax on low-wage households, effectively penalizing the family that tries to do the right thing by working their way into the middle class.

 

According to CBO, family coverage in 2016 is likely to cost about $14,400 under the so-called “silver option” in the health-care reform plan sponsored by Senate Finance Committee Chairman Max Baucus. In the Baucus plan, a family of four at the poverty line (about $24,000 in 2016) would have pay to about $1,400 toward coverage, with the federal government paying the other $13,000 on their behalf. In addition, the government would also provide $3,500 to reduce the family’s deductible and co-payment costs for health services. Thus, the new entitlement provided by the Baucus bill would be worth a whopping $16,500 for a family at the poverty line.

 

As incomes rise, however, the Baucus bill cuts the value of the entitlement. A family with an income at twice the poverty line, or $48,000 in 2016, would get $9,072 in federal assistance for coverage — still a substantial sum. But it’s $7,400 less than the family would get if they earned half as much. The Baucus plan thus imposes an implicit marginal tax rate of about 30 percent ($7,400/$24,000) on wages earned by families in this income range.

 

And that would come on top of the high implicit taxes already built into current law. Low-wage families with children also get the Earned Income Tax Credit (EITC). The EITC boosts incomes for those with the very lowest wages, but it is also phased-out as incomes rise. Past a certain threshold (about $21,400 in 2016), the EITC is reduced by $0.21 for every additional $1 earned. Throw in the individual income tax rate (15 percent) and payroll taxes (7.65 percent), and the effective, implicit tax rate for workers between 100 and 200 percent of the federal poverty line would quickly approach 70 percent — not even counting food stamps and housing vouchers.

 

The more Obamacare is rushed through Congress, the more likely it is to produce highly regrettable unintended consequences. Surely even the Democrats in Congress can see how damaging it would be to send signals to low-wage breadwinners that it no longer makes sense to seek a higher-paying job.

 

so in other words, the head of a family who bust his or her ass to get from the poverty level ($24K/year for a family of four) to double the poverty level ($48k) gives up $17K of that $24K in the form of higher taxes and lower subsidies. or, double your wage from 10 bucks an hour to 20 bucks an hour, and you get to keep 3 bucks.

 

Indeed, Jim seems to understate matters, as he includes only the employee half of the payroll tax. Including both the employee and employer halves, as economic theory says is appropriate, appears to give a marginal tax rate closer to 80 percent. And, of course, many states impose income and sales taxes as well, and these would further raise the overall marginal tax rate.

 

ok make that 2 bucks out of the 10 more he earns.

[Perchoutofwater]

But, Az taxes have never made anyone decide to work less, at least that is what Ursa tells me.

[Riffraff]

Just like places in Europe. Nearly 50% of their income goes to taxes. But they get free health care.

[Avernus]

Just like places in Europe. Nearly 50% of their income goes to taxes. But they get free health care.

 

how good are the doctors in those areas?....good doctors go where the money is...

[Riffraff]

how good are the doctors in those areas?....good doctors go where the money is...

I don't know, never used a European hospital.

 

I will say this though:

 

We have socialized medicine in America. The military uses it and there are plenty of quality doctors, both published and unpublished, providing quality care to the troops and their families.

 

There are some turds for docs as well, just like any hospital. Some do cutting edge care in such things as burns, amputees, rehab, and remote surgery. Sometimes having a boss that prints their own money has benefits.

[Perchoutofwater]

I don't know, never used a European hospital.

 

I will say this though:

 

We have socialized medicine in America. The military uses it and there are plenty of quality doctors, both published and unpublished, providing quality care to the troops and their families.

 

There are some turds for docs as well, just like any hospital. Some do cutting edge care in such things as burns, amputees, rehab, and remote surgery. Sometimes having a boss that prints their own money has benefits.

 

I've never heard of anyone saying the VA is all that good. No doubt there are some good docs there, but on average the VA is usually considered sub par, which is a damned shame.

 

You note cutting edge care in things such as burns. Any idea what hospital has the most patents for burn treatments? I'll give you a hint, it isn't a government hospital, and yet nobody treated there has to pay for their treatment. I wonder what health care reform will do to that hospital and those like it?

Edited October 8, 2009 by Perchoutofwater

[CaP'N GRuNGe]

http://www.cbo.gov/ftpdocs/106xx/doc10642/...ucus_letter.pdf

[Perchoutofwater]

http://www.cbo.gov/ftpdocs/106xx/doc10642/...ucus_letter.pdf

 

How much is it raising taxes? You know we can send someone to Mars and reduce the deficit if we raise taxes enough. Also, you know as well as I do that assuming it gets by the senate, it then has to go to the house as well. What is the likelihood it will still reduce the deficit when it comes out of that hell hole? Also what is the likelihood we get a CBO estimate on whatever the final bill is before it is voted on, and have time to read it and contact our representatives prior to it being vote on?

 

BTW does this as currently written reduce the deficit, or just reduce the deficit over what Obama originally said he was going to spend? Also, what was the estimated budget for medicare when it was passed, and what did it actually end up costing?

Edited October 8, 2009 by Perchoutofwater

[Riffraff]

I've never heard of anyone saying the VA is all that good. No doubt there are some good docs there, but on average the VA is usually considered sub par, which is a damned shame.

 

You note cutting edge care in things such as burns. Any idea what hospital has the most patents for burn treatments? I'll give you a hint, it isn't a government hospital, and yet nobody treated there has to pay for their treatment. I wonder what health care reform will do to that hospital and those like it?

The VA if for military members after they leave the military. The active duty military use different socialized hospitals.

 

No clue on the patents question, but they probably got plenty of research grants via the government.

 

 

 

Side note: I'm not for socialized medicine in America, but I also don't think it's the worst thing that can happen either.

[Azazello1313]

http://www.cbo.gov/ftpdocs/106xx/doc10642/...ucus_letter.pdf

 

well it's great that somebody in the democratic leadership finally wrote a bill that pays for itself with new taxes, but if the result is work to get from the poverty level to the middle class is effectively taxed at 80%, I'm thinking they may need to go back to the drawing board. those are some perverse disincentives.

[yo mama]

So.... people receiving benefits would be expected to contribute to the cost of those benefits on a sliding scale? Sounds fiscally responsible to me.

 

Besides, the $48,000 family is still $9,072 better off under the Baucus plan, relative to purchasing the same health coverage in the open market without the Baucus plan. Is this article implying we need to give the $48,000 family even more entitlement spending dollars? Or is it just whining that the family will not have the opportunity to pocket more after tax dollars at the expense of going uninsured?

 

Frankly, I'd have more respect for the author if he or she just said, "I don't like Obama and my mission is to urinate on whatever he proposes." It would have made for both a shorter and more entertaining read.

[nuke'em ttg]

 

he's bringin brack slavery

[WaterMan]

so in other words, the head of a family who bust his or her ass to get from the poverty level ($24K/year for a family of four) to double the poverty level ($48k) gives up $17K of that $24K in the form of higher taxes and lower subsidies. or, double your wage from 10 bucks an hour to 20 bucks an hour, and you get to keep 3 bucks.

 

Why would someone think there would be a need for such a thing?

[Ursa Majoris]

So.... people receiving benefits would be expected to contribute to the cost of those benefits on a sliding scale? Sounds fiscally responsible to me.

 

Besides, the $48,000 family is still $9,072 better off under the Baucus plan, relative to purchasing the same health coverage in the open market without the Baucus plan. Is this article implying we need to give the $48,000 family even more entitlement spending dollars? Or is it just whining that the family will not have the opportunity to pocket more after tax dollars at the expense of going uninsured?

 

Frankly, I'd have more respect for the author if he or she just said, "I don't like Obama and my mission is to urinate on whatever he proposes." It would have made for both a shorter and more entertaining read.

You don't get it. The imperative is to criticize Obama whatever he does. If this plan had no tax requirements, the beneficiaries would be freeloading parasites. Since it has got tax requirements, they are now victims of disincentive.

 

C'mon, get with the program, Yo.

[AtomicCEO]

You don't get it. The imperative is to criticize Obama whatever he does. If this plan had no tax requirements, the beneficiaries would be freeloading parasites. Since it has got tax requirements, they are now victims of disincentive.

 

C'mon, get with the program, Yo.

 

This does seem like crazy behavior. First they complaint that nobody's paying for it, or that only the rich pay for it, and then they complain that the poor pay for it. Kind of like complaining about Obama wanting the Olympics and then complaining about him not getting them. I've never seen a bigger bunch of pathetic whiners in my whole life. Surely I'm not the only one getting tired of it.

 

Wasn't skins banned for posting this frequency of whiney political posts over and over and over again?

[cre8tiff]

I've never heard of anyone saying the VA is all that good. No doubt there are some good docs there, but on average the VA is usually considered sub par, which is a damned shame.

 

You note cutting edge care in things such as burns. Any idea what hospital has the most patents for burn treatments? I'll give you a hint, it isn't a government hospital, and yet nobody treated there has to pay for their treatment. I wonder what health care reform will do to that hospital and those like it?

 

Ask Rovers how good it is.

[TimC]

Wasn't skins banned for posting this frequency of whiney political posts over and over and over again?

 

No, it was because he was a Redskins fan. All those that actually figure out how to use the innernets should be banned from posting on forums. Amiright?

[Azazello1313]

wow, these are all excellent points discussing the strong disincentive to working your way from poverty to middle class.

[yo mama]

wow, these are all excellent points discussing the strong disincentive to working your way from poverty to middle class.

You want some cheese with that whine?

[Azazello1313]

You want some cheese with that whine?

 

some rich irony from mr. "I don't like obama and I want to urinate"

 

funny how no one will touch the question of income from 100% to 200% of the poverty level being effectively taxed at 80%, and what the ramifications of that might be.

 

I will say, in many respects the baucus plan is by far the best specific proposal the dem leadership has put forward thus far, it incoroporates a lot of the ideas from the blue-dogs, and it gets a good CBO score. but it it is far from perfect, and this sort of effect seems like a major flaw, which I think any of you would acknowledge if you were being even a little bit honest about it.

[wiegie]

Az, would you mind telling us your solution?

[Big Country]

Just like places in Europe. Nearly 50% of their income goes to taxes. But they get free health care.

 

 

how good are the doctors in those areas?....good doctors go where the money is...

 

 

I don't know, never used a European hospital.

 

 

I have had the pleasure of being in hospitals/emergency care centers in England and Ireland. The waiting rooms weren't much different than those I have seen here, and the doctors were just as knowledgeable and seemed genuinely interested in my best interests. Even though they were going to be able to get me in fairly quickly for an outpatient surgery (I declined, as it would require a 2-3 week bedrest stay, and potentially longer before I could fly back to the states, and it was not life threatening, so just decided to deal with pain and get back to the US to handle the issue), I do know there can be long waits for non-life threatening surgeries, etc.

 

I know overall my family has received extremely good care there.

[bushwacked]

Wasn't skins banned for posting this frequency of whiney political posts over and over and over again?

 

Yup. But, at least Skins was funny. Az and his do boys are less funny than Dane Cook.

[isleseeya]

it would be much worse if we all worked real hard

 

you know the kind of hard work that does not give one the time to use the internet and or post on fantasy football websites

[Boilerduff]

You don't get it. The imperative is to criticize Obama whatever he does. If this plan had no tax requirements, the beneficiaries would be freeloading parasites. Since it has got tax requirements, they are now victims of disincentive.

 

C'mon, get with the program, Yo.

 

 

It's not just criticizing Obama, its criticizing policy that will hurt th US. If he would do somthing that made some sense, I would be happy to support him.

 

You will never get me to believe that:

 

You can cover more people and reduce the costs.

The governement will be better at taking care of us than competition.

Government interventions into any market help the market.

That you can bring up the poor by bringing down the rich.

 

Do something that helps everyone, not just democratic voters...