Another reason to oppose the "reform" effort. The effective marginal tax rates paid by lower income working people can already be a serious incentive, and "reform" would only make the problem worse.
For the first point see -
When Work Doesn’t Pay
nccp.org
I think the dollar figures really needed to cover the bare necessities aren't as high as that source states, the woman in the example might need that much to cover her current expenses, but if so her expenses are not as low as they possibly could be. Many families of that size live on a lot less than $40,600. Not that I'd want to support a family of three on that much but its quite possible.
But the important point is what happens as she makes more money from her employment. With the extra taxes she pays and the loss of benefits, if she increases her income from $16,600 to $33,200 (a difference of $16,600) she only gets to keep an extra $5,567, or 33.5%, in other words its as if she faced a marginal tax rate of 66.5%.
That's before "health care reform".
Now consider the subsidies I don't have specific enough data to calculate the additional effect. If the subsidies start phasing out at relatively low income they increase the effective marginal rate for low income people even more, if the phaseout doesn't happen to a higher level, it reduces that effect but extends the range of income that gets impacted by higher effective marginal rates. |
