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Tom Blumer

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September 23, 2013 - 12:00 pm
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In a September 13 email, Erin Hannigan of Organizing for Action’s “Truth Team” excitedly told readers about how, under the Patient Protection and Affordable Care Act better known as ”Obamacare” (the term she used), “millions of Americans will be eligible for financial assistance, or tax credits.”

Tax credits?

Since June 2012, thanks to Chief Justice John Roberts and his Supreme Court majority, the penalties the law will impose on individuals and families who do not purchase health insurance beginning next year are legally considered “taxes.” In the same convoluted sense that what most of us have been calling “premium subsidies” in Obamacare should really be considered “tax credits,” the premiums themselves should be considered “taxes.”

Hannigan’s email proudly points readers to a “cool calculator from the nonpartisan Kaiser Family Foundation that shows how the tax credits work,” and encourages everyone to “share it on Facebook or Twitter.”

Obamacare opponents should take Hannigan up on her suggestion: embed the calculator on your sites, and encourage everyone who opposes the law’s implementation and supports its defunding to take it for a test drive. Then, demand that the law’s defenders in Washington — as well as those who claim to oppose it but can’t find the courage to support its defunding — explain how they can permit the perverse results the calculator demonstrates to take effect.

You see, Kaiser’s “cool calculator” makes the exact points Robert Rector at the Heritage Foundation and yours truly have been arguing since early 2010 — namely, that the Affordable Care Act will deeply discourage work and virtually any other attempt at financial improvement. It will also throw new obstacles in the way of couples wishing to get and stay married, even to the point of encouraging marital breakups of families with children.

Millions of Americans who do not have employer-provided or other group health insurance arrangements and who don’t purchase private non-Obamacare individual or family coverage before the end of 2013 — something most people don’t realize remains an alternative for just a few more months — will be legally required to enroll in the Affordable Care Act’s health insurance exchanges or to face the penalties now characterized as “taxes.” The number of Americans forced to resort to the exchanges has (per my opinion) been artificially and deliberately juiced by the Obama administration’s illegal decision to delay the imposition of the “employer mandate” until 2015. Many individuals and families who would have qualified for employer-provided coverage if the employer mandate had been enforced in January 2014 will now have to go to the exchanges or face the penalties.

Those who enroll in Obamacare’s exchanges will be subjected to a brand new system of income-based federal taxation (again, their word) over and above Uncle Sam’s existing income and FICA (Social Security and Medicare) tax regimes. This  will include marginal rates for most enrollees ranging from 9.5 percent to 18 percent, along with myriad “cliffs” where premiums — er, taxes — skyrocket when a person or couple earns just one dollar of additional income.

Let’s look at a rate table for a single person with no children under Obamacare’s “Silver” Plan at selected ages (a more complete set of tables is here):

OcareSingleTaxCreditTable0913

The table tells us that in states which have chosen not to expand Medicaid, enrollment in that program will be mandatory for single people with annual incomes under $11,490, that group’s poverty line (some states have chosen to expand Medicaid access to everyone under 138% of the poverty level).

Income right at the poverty line triggers exchange enrollment and an immediate $230 premium. The premiums increase by $1 for each $50 of additional annual earnings up to $15,281. At the next dollar, the premium jumps from $306 (2 percent of $15,281) to $458 — a $152 tax on $1 of earnings. (Believe me, we’re just warming up with examples of “cliff” taxation.)

The next level is also intriguing, given that Obamacare is supposedly a masterpiece of “progressive” thought. The average marginal rate on earnings between $15,282 and $34,369 is 14.7%. As the footnote above explains (fully illustrated here), “marginal rates vary between 11% and 18% (rounded), and gradually increase as income increases.” But from $34,370 to $45,960 in income, as seen above, the marginal rate drops to 9.5 percent.

Thus, the “tax credits” OFA’s Hannigan thinks are “cool” are regressive, taking a higher percentage of additional earnings from lower-income working class people and a lower percentage from those with mid-range earnings.

Then look at what happens once a single person who is 50 or older hits annual earnings of $45,961. At that point, what remains of those wonderful “tax credits” goes up in smoke. (Speaking of smoke, you won’t believe how steep Obamacare’s tobacco surcharges are. But I digress.) For a 50 year-old single person, dollar number 45,961 causes their annual exchange premium (i.e., “tax”) to increase from $4,366 to $5,390. That’s because what Kaiser calls Obamacare’s “government tax credit subsidy” (they’re also having a hard time with the language) goes from $1,024 to zero. For a 64 year old, a “tax credit subsidy” of $4,688 gets zeroed out. The marginal tax rate on dollar number 45,961 for that person is a whopping 468,800%.

Comments are closed.

Top Rated Comments   
exempt congress and the u.s.s.c. from this medical destruction/obomination so they will stand by the little worm. when I first heard lawyer roberts had abdicated his responsibilities and power to this p o s, it was then I knew this slimeball from ??? had been tapping our com. lines all along. wouldn't have believed the i.r.s. would sink so low, but hey, with the affirmative action garbage they have been hiring in the gov. lately, who would doubt it now?

wonder was the company who vetted snowden and that navy killer also the one who gave us this p i t a hemorrhoid? as one congressman said, after watching a video of a computer expert explaining how the computer generated document was an obvious forgery, 'even a fifth grader could see those documents are forgeries'. so, using that logic, either we have a bunch of uneducated 4th graders making these pitiful, illegal laws, or we have an obvious and odious conspiracy to destroy our wonderful country. take your pick.

knowing how crap always seems to come back around, I hope those who voted this halfwit commie into office are the ones who will suffer (for decades) the most from his insanity. already we know that the younger generations that loved him so much will be the ones who will be paying back most all the $$ borrowed long after conservatives are dead and buried. looks like all the overseas people who loved him so much will be getting the last laugh as amerika sinks into financial oblivion. only thing is, they will be sinking down even more swiftly. its a lesson learned early in the 20th century - as America goes, so goes the world. maybe the saying should be, 'voter fraud has consequences', eh harry?

lmao
1 year ago
1 year ago Link To Comment
I do not know about any of you, but I will not comply with this law, nor pay any penalties - period.

This is the line I will not cross. This law is unconstitutional (clearly, and I do not need to be a graduate of Harvard Law to say so, either), is immoral and tyrannical.

This is where I will engage in Civil Disobedience.

This wretched government must be torn down and our Constitution restored to its rightful place at the center of our governance.

Period.
1 year ago
1 year ago Link To Comment
All Comments   (17)
All Comments   (17)
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Supreme Court May Get Second Chance to Kill Obamacare's Insurance Mandate


Pacific Legal Foundation has launched a new constitutional cause of action against the federal Affordable Care Act.



http://www.Pacificlegal.org/cases/tax-raising-Affordable-Care-Act-started-in-wrong-house-of-congress
1 year ago
1 year ago Link To Comment
Add the basic hourly cut to avoid employers purchasing insurance for their employees (27.5 hour week; 31% cut to wages) to the minimum fines involved, and you have at least a 32% cut in take home pay per single employee.
The amount of raise an individual would have to get to break even receiving average minimum wage is about $2.25 per hour.
Never gonna happen.
1 year ago
1 year ago Link To Comment
An unconstitutional and unjust law is no law at all.
1 year ago
1 year ago Link To Comment
WHo needs laws when you have a Community organizer in charge with a cheerleaders like Pelosi, Reid & Fwank
1 year ago
1 year ago Link To Comment
I just ran my numbers through and all I get is a choice between a yellow pill and a green pill and I have to pay 6 million dollars a month.
1 year ago
1 year ago Link To Comment
Left Wing moonbats start from the premise that ALL money belongs to the Government otherwise they could not argue as they do. So watching morons like Pelosi and the rest of the Left twist itself into pretzels trying to convince us , and themselves I think, that raising the debt ceiling has absolutely nothing to do with profligate Democratic spending and the COLOSSAL increase in the National Debt under the USURPER would be hilarious if it wasn't so serious.
1 year ago
1 year ago Link To Comment
exempt congress and the u.s.s.c. from this medical destruction/obomination so they will stand by the little worm. when I first heard lawyer roberts had abdicated his responsibilities and power to this p o s, it was then I knew this slimeball from ??? had been tapping our com. lines all along. wouldn't have believed the i.r.s. would sink so low, but hey, with the affirmative action garbage they have been hiring in the gov. lately, who would doubt it now?

wonder was the company who vetted snowden and that navy killer also the one who gave us this p i t a hemorrhoid? as one congressman said, after watching a video of a computer expert explaining how the computer generated document was an obvious forgery, 'even a fifth grader could see those documents are forgeries'. so, using that logic, either we have a bunch of uneducated 4th graders making these pitiful, illegal laws, or we have an obvious and odious conspiracy to destroy our wonderful country. take your pick.

knowing how crap always seems to come back around, I hope those who voted this halfwit commie into office are the ones who will suffer (for decades) the most from his insanity. already we know that the younger generations that loved him so much will be the ones who will be paying back most all the $$ borrowed long after conservatives are dead and buried. looks like all the overseas people who loved him so much will be getting the last laugh as amerika sinks into financial oblivion. only thing is, they will be sinking down even more swiftly. its a lesson learned early in the 20th century - as America goes, so goes the world. maybe the saying should be, 'voter fraud has consequences', eh harry?

lmao
1 year ago
1 year ago Link To Comment
some people have to learn the hard way...I expect more people to learn to live off the grid.
1 year ago
1 year ago Link To Comment
Cold Revolution
1 year ago
1 year ago Link To Comment
Eirinikos epanastasis.
1 year ago
1 year ago Link To Comment
Eιρηνικός επανάστασις.
1 year ago
1 year ago Link To Comment
Unless they have changed this recently, I understand that any penalties for not buying the insurance will only be collected by the IRS through debiting any income tax refund which may be due to the taxpayer. The simple way around this is to make sure that you adjust your withholding such that you will have no refund due. This further benefits the taxpayer as the gov't does not have access to YOUR money.
1 year ago
1 year ago Link To Comment
I can rob a bank and get money, too.

Just because I might get money doesn't make it right.

Defund and repeal the [multiple expletives deleted] thing.
1 year ago
1 year ago Link To Comment
Jeepers... Here it is just a few days before the exchanges are supposed to begin taking applications and you have only now figured out how this little detail works?

I took a very long hard look at how this works some months ago and began my financial planning for 2014 accordingly. I'm going to make sure that my MAGI is well below that 400% of "poverty" level. The ones I feel really sorry for are those barely getting by, barely qualifiying for subsidies, and then get a little windfall... like a $500 lottery win or a year-end bonus, and suddenly they are totally screwed.

My Congressional Representative and Senators still think this law is the best thing since sliced bread, and don't seem to be worried about the "trivial" issues like this.
1 year ago
1 year ago Link To Comment
Jeepers, DaveK Robert Rector and yours truly (emphasis: in that order; Rector did the original dirty work) have known and written about it since early 2010, as noted in the column. The mystery is why opponents of Obamacare haven't emphasized it.
1 year ago
1 year ago Link To Comment
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