Taxing Marriage Under the New Health Care Law

This is from Diana Furchtgott-Roth:

Let’s look at the example of June and Jake. Living alone, each earns $21,660… Unmarried, their premium would be about 6.3 percent of their income, or $1,365 each, $2,730 in total. If they were to marry, their combined income would be $43,320… This would push their premium …[to] $4,115 of their combined income. This would be a marriage penalty equal to $1,385, even before income taxes and phase outs of the earned income tax credit…

Comments (4)

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  1. Larry C. says:

    I’m not a bit surprised that the health bill is anti marriage.

  2. Vicki says:

    I’m not surprised either. But it’s hard to understand why they would do this. At the very same time the president is creating hospital visitation rights for gay couples.

  3. Stephen C. says:

    I don’t think this administration cares about marriage.

  4. Bart Ingles says:

    I wonder if Pelosicare will have the same class-barrier effect as other government innovations, such as the mortgage interest deduction and free public schools.

    By “class-barrier effect” I mean the ability to function like the detent mechanism in a light switch, making it hard to transition from one state to another.

    Example 1: the mortgage interest deduction tends to keep renters as renters and homeowners as homeowners. Renters pay high taxes, in part to subsidize the mortgage deduction, making it harder for them to save for a down payment. But once home ownership is achieved, the deduction helps them remain in place.

    Example 2: a poor primary education is an obvious barrier to upward mobility. But parents in neighborhoods with bad public schools who seek a private alternative must pay twice– once in taxes, and again for private school tuition. Of course the poor can get by more cheaply by enduring the public school, and the rich have no difficulty paying for private schools. The barrier only kicks in when someone tries to move from one class to another.

    I’m wondering whether the same effects exist in health care. For example, high effective marginal tax rates would reduce the incentive increase one’s income. And it looks as though employment-related provisions of the bill will encourage employers to partition themselves into companies with exclusively high- or low-income employees.

    Companies employing high-income professionals might provide pre-tax benefits to full-time employees, while having all low-level tasks performed by temps who are actually employees of a separate temp agency.

    Any other ways this class-barrier might manifest?