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Capretta: ObamaCare Is a 70% Tax on Work

In  his latest posting on National Review Online’s Critical Condition, James Capretta, a fellow in Economics and Ethics Program at the Ethics and Public Policy Center, raises the issue that the bills in Congress lack any thorough analysis on the effect they would have on work incentives for low-income families.

Under Sen. Max Baucus’ bill, families at the federal poverty line would receive a $16,500 entitlement from the federal government to pay for their health coverage, Capretta writes. As families’ income increases, the entitlement shrinks and tax rates jump. Capretta notes this would come “on top of the high implicit taxes already built into current law.” That includes reduced Earned Income Tax Credit (EITC), which low-income families with children receive, in addition to the individual tax rate (15 percent) and payroll taxes (7.65 percent).

“The effective, implicit tax rate for workers between 100 and 200 percent of the federal poverty line would quickly approach 70 percent — not even counting food stamps and housing vouchers,” Capretta writes. He highlights a concern Heritage policy analysts share that the Obama administration’s health agenda will hurt low-income families and workers the most.

Tags: EITC, low-income families, ObamaCare, tax rates