I had to rush yesterday, so wanted to add a little more info. for those who don’t have time or inclination to follow up on Imprimis thru Hillsdale.edu. The author was speaking about how “the penalties on employers and subsidies in the exchanges add up to a tax on full-time employment -a tax you pay if you work full time but not if you work part time or don’t work at all. And the problem with that, of course, is that by taxing full-time work–which is the same as subsidizing part-time work and unemployment–you get less of the former and more of the latter two.”
I WANTED TO ADD THE NEXT SECTION: ” How does this full-time employment tax work with regard to the employer mandate? As I mentioned, the penalty applies only in the case of full-time employees and only to employers that don’t offer health coverage, and it applies only in those months during which those full-time employees are on the payroll. If an employee cuts back to part-time work, the employer no longer has to pay the penalty. The dollar amount of the penalty doesn’t depend on whether the employee is rich, poor, or middle class–if he works full time, the employer must either provide insurance or pay the penalty. And the penalty is indexed to health insurance costs, so every year those costs increase more than the economy and more than wages, the penalty will increase more than the economy and more than wages.
The current penalty is usually described as $2,000 per year per full-time employee. But it’s really more than that, because the penalty, unlike wages, is not deductible from business taxes. So in terms of a salary equivalent, the penalty is closer to $3,000 a head. Needless to say, this penalty reduces competition in the labor market: IT DISCOURAGES EMPLOYERS FROM COMPETING FOR FULL-TIME EMPLOYEES–WHICH, IF YOUR AN EMPLOYEE, IS A BAD DEAL. ALSO, THERE ARE A LOT OF EMPLOYERS WHO ARE NOT GOING TO PAY THE PENALTY BECAUSE THEY DON’T MEET THE SIZE THRESHOLD OF 50 OR MORE EMPLOYEES, AND EMPLOYEES ARE GOING TO SUFFER BECAUSE THESE SMALL EMPLOYERS WON’T WANT TO BECOME LARGE EMPLOYERS AND THEREFORE SUBJECT TO THE PENALTY.
Furthermore, this mandate or penalty–and by this time it should be clear that we can think of it as a tax on having a full-time employee-disproportionately HARMS LOW-SKILL WORKERS. Think about it this way: How many hours does a worker have to work each week to produce the $3,000 per year of value to justify keeping his job or being hired? For a minimum-wage worker, that comes to eight hours a week, all year round-one day of work a week for the government due to the ACA alone. High-skilled employees can obviously produce $3,000 worth of value in less time, so the penalty will have less of an impact on them.
SUBSIDIZED HEALTH INSURNCE EXCHANGES
What of the tax distortions that come from the subsidized health insurance exchanges or marketplaces? To begin to think about this, imagine paying full price for you health care. How does full price work? Well, you pay the full price. The health care provider doesn’t look at your tax return and adjust the bill accordingly. So we would never call paying full price for health care an income tax of any kind. Or imagine there is a discount on the full price–for instance, 30 percent off for everybody regardless of income. In that case it’s still not an income tax. No matter how much you earn, you pay the same price. But what if the discount (or subsidy)is tied to your employment situation? Not to your income, but to you employment situation. That how the exchanges work. IF YOU HAVE A FULL-TIME JOB WITH AN EMPLOYER THAT OFFERS COVERAGE–WHICH IS THE CASE FOR MOST EMPLOYEES IN OUR ECONOMY–YOU DON’T GET THE SUBSIDY OFFERED THROUGH THE EXCHANGES. IF YOU WANT TO GET THE SUBSIDY, YOU NEED TO BECOME A PART TIME WORKER OR SPEND TIME OFF THE JOB. In other words, THIS DISCOUNT, TOO, IS A TAX ON FULL-TIME EMPLOYMENT. Of course no politician ever calls it a tax. But when you are in a group of people that doesn’t receive a subsidy that people in another group receive, THAT’S A TAX.
———————————————————There are a number of full-time workers who may have to work ten, 20, or even 30 hours a week to create the value the would get for free if they worked part time or didn’t work under the ACA.——————–
As a result of the ACA, then, we are going to have fewer people working and less value created overall….. In terms of the ACA, whereas only some workers will experience the penalty directly, it will be felt across the economy because workers will move out of the penalized businesses and customers will do the same, since those penalties are passed on to them in the form of higher costs………………………………Their (taxes) economic impact on workers varies widely, affecting low-skilled workers the most. They create all kinds of productivity problems and will have visible and permanent effects on the economy”
I copied the rest yesterday. We would call these unforeseen consequences. Which is why Obama keeps delaying parts of the law…It seems to me we need to write to Congress and tell them to change this part of the law to avoid these consequences. We want more full time jobs and more people working, not less. WRITE YOUR CONGRESSMEN/WOMEN