Tag: "tax"

Does it Pay to Work?

The highest marginal tax rates are faced not by the very rich, but by low-income families. The reason? In addition to direct taxation, low-income wage earners find they lose means tested welfare benefits when they earn higher incomes. As Nancy Folbre at Economix explains:

As a result of losing eligibility for means-tested benefits, low-income and middle-income families sometimes experience much higher marginal effective tax rates (sometimes exceeding 90 percent) than those at the top of the income distribution.

But she then goes on to criticize fellow blogger Casey Mulligan, who estimates that a major reason for our sluggish growth and as much as half of the excess unemployment we are experiencing on these high marginal tax rates. Her complaint: Mulligan incudes Social Security payroll taxes in the calculation of the overall marginal tax rate, but ignores the future benefits those taxes give rise to.

As it turns out, Folbre’s criticism was addressed in a study for the National Center for Policy Analysis by Jagadeesh Gokhale, Laurence J. Kotlikoff, and Alexi Sluchynsky (NBER version here.) The authors explicitly incorporate future Social Security benefits as well as current payroll taxes to calculate lifetime marginal tax rates.

Findings below the fold.

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Oct 31, 2013 | 14 comments | by

Has Anyone Noticed: We No Longer Have a Government of Laws

This is called making it up as you go along:

What the administration is doing today is probably best described as a tweak to the individual mandate: They are allowing anyone who purchases coverage during open enrollment (up through March 31) to not face a tax penalty for those three months they spent uncovered. This is only true for people who buy coverage through the marketplace. (Sarah Kliff)

Oct 24, 2013 | 14 comments | by

Do You Know What Your Modified Gross Income is?

If not, 76800058no ObamaCare subsidy for you.

[Y]our “adjusted gross income”…can be found on line 37 of your 1040 tax return form. But it requires that you add back certain items like nontaxable Social Security income, tax-exempt interest and foreign-earned income…

The figure also includes income from items like dividends, interest, real estate and retirement account withdrawals. (More)

Oct 17, 2013 | 11 comments | by

Headlines I Wish I Hadn’t Seen

ThereObamacare_stack_0 are 11,588,500 words of final ObamaCare regulations, but only 381,517 words in the ObamaCare law itself.

Mother obsesses over allowing her daughter to eat candy.

Unions poised to win delay of ObamaCare tax in budget deal.

Exceptions to the ObamaCare mandate: people facing such hardships as foreclosure, domestic violence or homelessness, Mennonites, Native Americans, etc. So if a lender forecloses on Donald Trump’s $125 million Florida home, he’s off scott-free?

Why government IT fails so badly, so often. HT: Tyler Cowen.

Oct 16, 2013 | 17 comments | by

Headlines I Wish I Hadn’t Seen

Golden Retriever puppyDid you know that Fido is paying the medical device tax?

Maryland ObamaCare exchange: “no doctors are found.”

Soon, drones will be able to make kill decisions on their own.

Information you give the Maryland exchange may be shared “with the appropriate authorities for law enforcement and audit activities.”

Oct 09, 2013 | 15 comments | by

How ObamaCare affects Marginal Tax Rates

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The 2009-10 peak for marginal tax rates comes from various provisions of the “stimulus” programs in the American Recovery and Reinvestment Act of 2009 and the extension of unemployment benefits to 99 weeks in some states. At the end of 2012, the marginal tax rate index reached its lowest value since 2008: 43.9%. A little over a year later (January 2014), the index will be close to 50%, driven up by the expiration of the payroll tax cut and multiple provisions of the Affordable Care Act. The ACA employer penalty, delayed until 2015, adds more than a percentage point in that year alone, while other ACA provisions strengthen their disincentives for the various reasons cited above.

Casey Mulligan. Ungated version of the original paper.

Oct 03, 2013 | 11 comments | by

Hits and Misses

Are cigarette taxes too hdyn002_original_340_255_jpeg__3b128b732817770ab49e0d8b3898c862igh? HT: Jason Shafrin.

Can you inherit mental illness?

A post at The Incidental Economist defends the malpractice system. Or does it? Someone send them a copy of my Health Affairs piece — which they keep not reading.

Arnold Kling has a fair and balanced discussion of what’s been happening to median income.

Why taking antibiotics you don’t need might kill you.

Sep 20, 2013 | 13 comments | by

GOP Health Plan: Good, Bad and Ugly

The House Republican Study Committee has a new health proposal. It would repeal the Affordable Care Act and substitute the following:

The Good

  • In place of the current system of excluding employer health expenses from the employees’ taxable income, the plan would give people a standard health deduction of $7,500 (individual) or $20,000 (family), regardless of how much the insurance actually cost. The incentive effects here are very good. No longer could people lower their taxes by spending more on health insurance or face additional taxes if they find ways to economize.
  • HSA restrictions would be substantially liberalized, including allowing HRA deposits to be withdrawn as taxable income (which would double the number of people who can now do that), letting FSAs roll over (effectively creating 35 million new HSA accounts) and extending the HSA concept to Medicaid.

The Bad

  • Unlike the more familiar idea of a tax credit (with the same subsidy for everyone), this approach gives the largest tax break to the highest income earners. It is probably even more regressive than the current system. [And there is absolutely no defensible reason for structuring it this way!]
  • It solves the pre-existing condition problem by making health insurance guaranteed issue for anyone with continuous coverage. This gives plans incentives to dump their sickest enrollees on other plans and creates other perverse incentives for buyers and sellers of insurance. It’s possible that these perverse incentives may be worse than similar incentives under ObamaCare.

The Ugly

  • The plan takes away the ObamaCare subsidies for an estimated 25 million newly insured and has no provision to help the roughly half of the population that pays no income tax.
  • Based on CBO estimates of a Bush administration proposal it looks like this proposal could un-insure as many as 20 million voters — oops, I mean people.
Sep 20, 2013 | 22 comments | by

Should Medicare Benefits Be Taxed?

tax-calculator_304Congress’s Joint Committee on Taxation…calculates the taxes that ought to be levied on Medicare benefits in excess of taxes and premiums paid. This year, the tax expenditure for the hospitalization portion of Medicare is $34 billion, $26.4 billion for Medicare Part B and $6.6 billion for Medicare Part D, which provides prescription drugs. That is a total tax benefit to Medicare beneficiaries of $67 billion in 2013. (More from Bruce Bartlett)

Sep 17, 2013 | 12 comments | by

Longshoremen to Leave AFL-CIO Over ObamaCare Cadillac Tax

The ILWU President made it clear they are for a single-payer, nationalized healthcare policy and are upset with the AFL-CIO for going along with Obama on the confiscatory tax on their “Cadillac” healthcare plan.

The Longshoreman leader said, “President Obama ran on a platform that he would not tax medical plans and at the 2009 AFL-CIO Convention, you stated that labor would not stand for a tax on our benefits.” But, regardless of that promise, the President has pushed for just such a tax and [President Richard] Trumka and the AFL-CIO bowed to political pressure lining up behind Obama’s tax on those plans. (Breitbart)

The union also slammed Obama’s immigration plan, with one official saying it is “designed to give [only] highly-paid workers a real path to citizenship.”

Sep 03, 2013 | 15 comments | by
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