Individual Mandate Would Impose High Implicit Taxes on Low-Wage Workers | Michael F. Cannon | Cato Institute: Commentary

Individual Mandate Would Impose High Implicit Taxes on Low-Wage Workers | Michael F. Cannon | Cato Institute: Commentary: "In their attempt to expand health insurance coverage, House and Senate Democrats are poised to make the American dream less accessible to low-income Americans by hitting them with higher implicit tax rates than even multi-millionaires face.

In a new study, I found those implicit marginal tax rates would hover near 70-80 percent over broad ranges of income. In many cases, they would exceed 100 percent, financially penalizing those who try to climb the economic ladder."

"The penalties are so small that healthy individuals could save as much as $3,000 per year by going uninsured, while families of four could save $8,000. Those savings would grow over time. Each bill would effectively eliminate any penalty for 'going bare' by forcing insurers to sell to the uninsured at standard premiums whenever they fall ill.

When healthy people respond to those incentives by abandoning insurance pools, premiums will rise for those who remain. That will create pressure for even more government spending and higher taxes.