We-Have-To-Pass-It-To-See-What’s-In-It Fact of the Day
Employer penalties are not deductible. Casey Mulligan explains:
Thus you might think that the new $2,000 penalty would reduce wages by about $2,000 per employee per year. But unlike employer payroll taxes, the employer responsibility levies are not deductible from employer business taxes (see page 74 of this I.R.S. document). To have the same after-tax profit, an employer in the 39 percent bracket (a typical state-plus-federal bracket for corporations) would have to cut wages by $3,046.
An employer paying the $3,000 penalty would have to cut wages by $4,569. That would push someone working full-time at $10 per hour down to minimum wage.
“That would push someone working full-time at $10 per hour down to minimum wage.”
What happens when we raise the minimum wage to $9 per hour? Will we then cut hours?
This is a necessary cost and will be absorbed by businesses in the free capitalist market in order to expand health services more equitably to individuals who cannot currently afford such services.
You should be thankful
In mother Russia, our system is complex and immensely inefficient. The “private-market” reforms of 1991 – 1993 have resulted in more than 300 private insurers but virtually no competition for patients which leaves most Russians with no effective choice in their insurer or in their health care provider. Also, insurance companies are passive intermediaries, not informed purchasers.
Please, embrace your health exchanges and gladly pay the $2,000 or $3,000 charge. It could be worse!
Wow! I didn’t realize this penalty wasn’t a business deduction. Better to fire the low-income workers and contract out for their low-wage services. Low-wage jobs will likely migrate to small (under 51 worker) firms that can take advantage of the Exchange. At least, that’s I think is likely to happen.
I think people should opt to work for a pay without having to ask for health insurance. I personally think we all should own into our own health insurance and not have to rely on the employer. Most businesses already have enough costs to worry about, taking the risk with health insurance, given the current climate, should not be necessary.
Obamacare is a complete failure! I do not understand how the President couldnt forsee what everyone was telling him!
Vladmir,
In Mother Russia, the Minimum Wages You.
o.0
Vladimir what era are you from?
I think this is going to have a terrible effect on employment in the U.S. Maybe we’ll see the Keystone pipeline project passed in order to offset these inevitable poor job numbers in the coming months/years.
The aforementioned penalty sounds like it’ll make things tough on low-income workers, even though the whole propaganda behind the new law is to make things more equitable for the lower rung of the ladder. Just don’t see how this makes sense. Perhaps someone objective can explain things better to me.
It means that markets are going to ultimately compensate for federal “equitibalirizering” by creating incentives for firms to higher part-timers to circumvent the legislation. Ultimately, harming those who were equitibalirized.
Andrew, as an academic, I try to be reasonably objective. However, I do not see very many good things coming from the current iteration of Obamacare. Hopefully, Obamacare will itself be changed drastically – so that it will actually work – but the left of centre people will still support it because of the name.
“equitibalirizering”
Kyle, do you have a definition for this word?
Health care is so complicated, I honestly don’t have an ideological bias to confirm what government’s role is in all of this. Too much of a role and of course it seems things can get out of control, but almost role and seems like employers could take advantage of the system as well. The intricacies of living in societies comprised of millions of people. Everything was more simple back in the stone age.