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Tom Blumer

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September 25, 2013 - 12:20 am
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In a September 13 email, Erin Hannigan of Organizing for Action’s “Truth Team” bragged about a “cool calculator from the nonpartisan Kaiser Family Foundation” showing how Obamacare’s “tax credits” work, and encouraged everyone to “share it on Facebook or Twitter.”

Obamacare’s opponents, especially those who advocate defunding it before it goes live, need to follow Hannigan’s suggestion, and even embed it on their websites and blogs. That’s because what Kaiser’s “cool calculator” really does is expose the statist health care regime’s three ugliest financial elements.

I covered two of them in my previous PJM column. The first is that, when combined with Uncle Sam’s current income and payroll tax regimes, the gradual expiration as income increases of Obamacare’s “tax credits” — which Kaiser’s model schizophrenically describes as “government tax credit subsidies” — will raise the portion of income taken by the government for each additional dollar of earnings to between one-third and one-half, effectively taxing most American workers at marginal rates usually limited to the planet’s highest income earners. The second is that its subsidy “cliffs” will cause middle-aged single people and married couples making as little as $45,960 and $62,040, respectively, to lose over $10,000 in subsidies — or “tax credits,” in the preferred language of OFA and the U.S. Supreme Court’s — when they earn just one additional dollar. These bugs, which jubilant “progressives” as seen above apparently believe are features, will crush incentives to work and to otherwise pursue financial self-improvement.

The third tragic outcome of Obamacare is what it will do to marriages and families. In January 2010, two months before Obamacare’s passage, the estimable Robert Rector at the Heritage Foundation gave the impact a name: the “wedding tax.”

To illustrate, let’s start with the 60-year-old married couple with no children whose situation I illustrated at the end of Part 1:

MarriedNoKidsAge60OcareGraph0913

If they have identical earnings totaling $65,000, which will usually net down to $50,000 or below after all income and payroll taxes, their Obamacare exchange Silver Plan premium next year with the same earnings will be $16,382, or about one-third of what used to be their take-home pay. (And they call it the “Affordable Care Act”?)

What can this couple do? Well, they could decide to earn a few thousand dollars less, which will negate the five-figure premium hit. Encouraging ordinarily willing workers to put in less effort isn’t good in any economy, but especially not this one. But if either spouse’s earnings are unpredictable or hard to precisely track, they could still “mess up” and get socked with a premium they can’t afford.

The “easiest” solution would be to avoid the “wedding tax” entirely by getting divorced while still living together. Here’s what would happen if they make that choice:

MarriedVsCohabit60yoOcare0913

Instead of facing an exorbitant premium increase once their combined earnings hits $62,041 if they were to stay married, each cohabiting adult can earn up to $45,960 before Obamacare’s “tax credit”-free premiums kick in. Their annual after-tax savings at age 60 if they shack up and keep their individual earnings between $31,021 and $45,960 will range from $7,650 to over $11,000. The annual savings will slightly increase every year until Medicare kicks in at age 65. That kind of money can buy a lot of gifts for the grandkids.

But the grandkids will also face the prospect of seeing their moms and dads divorce because of Obamacare.

Let’s look at the situation of a 40-year-old couple with two children. The spouses’ annual earnings are $70,000 and $23,000, respectively:

MarriedCouple93kDivorce2KidsOcare0913

The couple’s annual unsubsidized premium while married is $11,547 (OFA’s vaunted “tax credits” disappear at $92,401 for married couples with two children). But if they divorce and shack up while giving custody of both children to the lower-earning spouse, their combined annual premiums, at $4,317, will be over $7,200 lower. That’s over $600 a month. As was the case in the previous example, the savings from divorce will gradually increase every year. Parents will be torn between doing what Western civilization has considered morally right for millennia and their children’s financial well-being as never before.

MUCH MORE ON NEXT PAGE

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Top Rated Comments   
..... the Internal Revenue Service will task itself with finding cohabiting couples ..."

Question. In jurisdictions that permit gay marriages will two unrelated old ladies who have lived together for many years be assumed to be homosexual and thus technically married? Will they be required to reveal the exact nature of their relationship under penalties for perjury?

What if three of them live together?

Gays will soon have access to the same concept of marriage as heterosexuals. Seems that they should have to play by the same rules.

There may at least be some entertainment value as this catastrophe unfolds.
47 weeks ago
47 weeks ago Link To Comment
(1). What are the exact details of the relationship between you and the person with whom you share living arrangements?

(2). Do you own or otherwise have access to a firearm?

(3). What is your exact detailed medical history?

These are three questions that you soon shall reveal to government authorities under penalties for perjury which will include substantial fines and/or imprisonment.

This is today’s Amerika. Think about it.
47 weeks ago
47 weeks ago Link To Comment
Obamacare will be implemented; it will be a catastrophe; it will not be repealed once it is in place. That's just the nature of government programs. After it is in place, to go back to the former state or to change to another system would be so disruptive as to engender more chaos.

We get it; we're stuck with it.
47 weeks ago
47 weeks ago Link To Comment
All Comments   (56)
All Comments   (56)
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If Obamacare is so good why did Conress and President hand themselves exemptions from it?
Never eat where the cook refuses to eat his own cooking.
47 weeks ago
47 weeks ago Link To Comment
Almost every comment in this forum indicates that each writer opposes one or more features within the 2,200+ pages of Obamacare.

May I suggest that Obamacare is actually NOT the problem, but an unfortunately over-sized symptom of the real problem all citizens face from their currently elected representatives?

Some writers are more astute to the real problem, i.e. carve-outs, exemptions, partial delays and other preferential treatment for SOME (but not all) citizens is an odd way to garner political support for the otherwise withering public support for Obamacare.

However, even those objections are only sniffing up the skirt of what we have done to ourselves by accepting the notion that legislators, the president and even the courts can LEGALLY take any federal law and apply it, or not, to specific groups, individuals, associations, corporations from whom they then, in turn, garner favor.

Ever wonder why a candidate for U.S. Senate would collect and spend tens of millions of dollars to take a six-year job that pays around $200,000 annually? Or maybe it should be rephrased as to why would individual voters, unions, companies, PACs and associations PAY a candidate those same millions?

Answer- we have allowed the entire federal government to bestow and enforce rights, taxes, benefits, regulations, exemptions, and even laws that do not apply equally to all citizens.

There can be, and there is no equal protection under the law when the law, its application or its interpretation, favors some over others. Obamacare is only the latest over-sized example of how modern government has transformed into a self-impowering growth industry at the expense of less individual freedom for the citizens.What does happen in that beggar-thy-neighbor environment is that special interests fester and grow and wrangle special treatment to benefit their own narrow interests. At this stage, human nature takes over and all bets are off... as Pogo once famously declared, "We has met the enemy, and they are us!"

Only by retrenchment in federal powers as assumed, though constitutionally-enforced language declaring any feature of any federal law, regulation, tax, benefit, exemption that does not apply equally to each and every U.S. citizen as null and void can we even begin to think about reversing the trend to more government, more federal debt and less individual freedom. Pray, please, for this great country!
47 weeks ago
47 weeks ago Link To Comment
This situation isn't entirely new. We lived for a while in a poor neighborhood and now we own rental properties in that neighborhood and other nearby ones. There is lots of Section 8 housing. Lots of "single" black women on TANF. Oh, yeah, there's a "dad," but they have no incentive to marry, because he has a job and they'd lose all the TANF and section 8 benefits. There were "welfare" families in the neighborhood that lived better than us, because the mom got all the benefits and the boyfriend worked a full-time job. Then there was the rampant foodstamp trading/fraud. The welfare system has been discouraging married for a very long time. Now they're bringing the same brilliant strategy to the rest of us. This is what "fundamental transformation" looks like.
47 weeks ago
47 weeks ago Link To Comment
The only way we will get rid of this law is to have a revoultion or by the complete meltdown of the US financial system which will probably happening sooner than later
47 weeks ago
47 weeks ago Link To Comment
And those Catholic Bishops were all for Obamacare once upon a time.
47 weeks ago
47 weeks ago Link To Comment
ObamaCare is discriminating against the LGBTs, they're the only ppl that get married these days.
47 weeks ago
47 weeks ago Link To Comment
I just ran the numbers for our own family through the calculator. Since I have no income, the children and I would only qualify for Medicaid (assuming I had full legal custody. I have no intention of actually separating from my husband/their father). Even if I assumed that I had some "child support" from my husband, we wouldn't qualify for any subsidy unless our income was over the poverty line. So, for our situation, staying married makes more sense; divorced, without a subsidy for the portion of our family that is below the poverty line, we don't qualify for any subsidies, so it would actually be a lot more expensive (or we would be on Medicaid, depending on the state). At any rate, at this time, the company my husband works for does not apparently plan to stop our insurance, which is nice since that calculator is projecting that our health insurance would cost much more than what we're paying now (although, of course, his company is paying the bulk of that for us, so theoretically if they stopped doing that, they would give him some or all of that money as an increase in salary).
47 weeks ago
47 weeks ago Link To Comment
Since the government exists because of the amount we are taxed, how about we stop paying our taxes? There would be too many to put in jail and the government would come to a grinding halt. What an opportunity to start over as the founding fathers did. Maybe next time we will be smarter and prevent entitlement programs, have term limits and implement tort reform.
47 weeks ago
47 weeks ago Link To Comment
and avoid payroll tax deductions!
47 weeks ago
47 weeks ago Link To Comment
House Bill HR 25 and Senate Bill 122 Fairtax would have the same effect.
47 weeks ago
47 weeks ago Link To Comment
Could you imagine if that were to happen. Currently bills in Congress HR25 and S122 would eliminate the IRS and enact the fairtax.. I believe the fairtax would have and positive effect on the economy and strengthen the individual liberty established by the constitution.
47 weeks ago
47 weeks ago Link To Comment
no one has to buy anything

the "tax" is far cheaper and easy to legally avoid - don't have a refund due and the IRS cannot collect the "tax"

OPT OUT AMERICA
47 weeks ago
47 weeks ago Link To Comment
hey all you gay people - get married - get slapped

because the government loves you so

bwwaaaahhhhaaaaahhhhaaaa

tried to tell you fools you were just being used
47 weeks ago
47 weeks ago Link To Comment
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