ObamaCare Will Wallop The Middle Class

It has already been reported in an Associated Press (see my past blog “Obama Policies Pushing People Into Poverty”) study that the middle class is shrinking. On January 1, 2014 the middle class will take another hit when ObamaCare goes into effect. The Affordable Care Act will require the middle class to pay the highest tax increase it has ever faced. Here are the facts.

Dr. Laurence Kotlikoff, economic professor at Boston University, did a study entitled, “Does It Pay At The Margin To Work And Save?” Our income taxes are arranged into progressive brackets. At some point a worker can get a raise which will place him/her into the next bracket which means higher taxes. In simple terms, it is a “share the wealth” scheme but the wealth is shared with the government.

Dr. Kotlikoff uses the term marginal tax rates in his study. By definition, a marginal tax rate is a tax imposed on the next dollar you earned.

In his study report, Dr. Kotlikoff stated that the poor will get substantial tax credits at the exchanges being set up or face a penalty. One major flaw in ObamaCare is that the Internal Revenue Service has no way to collect the penalty if people don’t get health insurance. So how many of the poor will wait until they absolutely need health insurance and only then buy it at the exchanges?

The example of a middle class is a family of four where the income is $70,000. Dr. Kotlikoff calculated that the family income is taxed at 37% at that level. According to his calculations, ObamaCare will add another 13% in taxes for a grand total of 50%. This is why the middle class will have the largest tax increase in history. Dr. Kotlikoff calls it “recipe for catastrophic success.” People will be pushed for working their way up the socio-economic ladder.

Another way of looking at the impact of taxes on wages is that when you go to work, the money you earn in the morning belongs to you but what you earn in the afternoon belongs to the government. Liberals will only understand this when it hits them in the pocketbook.

Dr. Kotlikoff is a liberal. He admits he voted for Obama in the two presidential elections. This makes his study more relevant. He thinks ObamaCare will collapse because it is unsustainable. His is the latest in a series of studies that make that point but liberals deny, despite the facts, that ObamaCare is already in deep trouble. This is why liberals are part of the problem. They rationalize the failures and ignore or deny the facts.


About camden41

Retired public school administrator Retired history professor: Taught Western Civilization, American Civil War, United States History, Economic History, Ancient & Medieval Foundations, American History Since 1945
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