October 28, 2011

Obamacare’s Marriage Penalties: Been There …

Filed under: Economy,Health Care,Taxes & Government — Tom @ 10:48 am

… wrote a column on that — 19 months ago, in March 2010 (PJ Media; BizzyBlog).

It’s good to see Jim Angle at Fox News (HT to an emailer) covering it, but his calling it “a new wrinkle” is more than a little hard to take.

My column was based on what had to be weeks of work done by Robert Rector at the Heritage Foundation in January 2010. The Republican opposition’s failure to reference Rector’s work in opposition to Obamacare, aka “The Affordable Care Act,” was an epic strategic failure.

Here are a few paragraphs from Angle’s report today:

Obama’s Health Care Law Penalizes Marriage, Analysts Say

A new wrinkle has surfaced in the implementation of the federal health care law that critics argue will impose a significant penalty on women and marriage.

The law includes generous subsidies for the uninsured so they can afford to buy coverage in the new insurance exchanges that are part of the legislation.

But several analysts told Congress Thursday the nature of the subsidies has an odd effect.

“The way this bill is structured, there are disincentives for women to marry and disincentives for women to work,” said Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute for Policy Research. “And for a bill that’s supposed to make Americans healthier, these disincentives are truly startling.”

Critics say that beginning in 2014, Americans will find it more advantageous to stay single than marry because it will be easier to afford health coverage.

It isn’t just “critics”; it’s the hard math, laid out in the table which follows:


I explained the table and its clear implications in March 2010 (bolds added now were not in original):

The orange boxes represent examples where the subsidy decrease amounts to almost 80% or more than 80% of a couple’s $5,000 increase in combined or joint income. After adding another 7.65% for Social Security and Medicare taxes on top of the typical 15% (or higher) marginal federal income tax rate, the extra $5,000 earned will cost the couple more than $5,000 — even before considering state and local income taxes.

Then there are the purple boxes, where subsidy loss alone amounts to more than $5,000, including one case where it’s more than double that, before considering any other taxes.

… There’s a term for a state that penalizes additional earnings on a dollar-for-dollar basis, and it surely isn’t “representative democracy.” I don’t think anyone has yet coined a word describing a political philosophy that is okay with taking more than that. Perhaps it should be “Obamism.” Note that this is far more extreme than virtually anything Europe’s most brazen socialists have attempted since World War II.

Given the disincentives, many and probably most lower- and middle-income Americans will conclude that there’s no point in accepting promotions, working overtime, getting a second job, or attempting any other form of financial self-improvement (except perhaps under the table). They will thus end up stuck where they are. The remarkable income mobility which is so critical to long-term economic growth and prosperity and which has marked this great nation as so unique for centuries will become a distant memory.

To update to reflect current news, Obamacare is perhaps the most effective mechanism ever invented for keeping the 99% right where they are.



  1. This reminds me of what I discovered last year while doing my taxes. Last year was an abberation as I moved to a new job and bought a house with a VA Loan (11 years Naval service.)

    Due to the deduction for mortgage insurance being eliminated when your AGI is MORE THAN $100,000, and the fact that a VA loan requires all insurance in the closing costs, by contributing $2500 to a traditional IRA–reducing AGI to LESS THAN $100,000, I got a reduction in federal and state taxes of $2000. I figure that was a 400% return on investment, I doubt I’ll get that deal ever again. You have to love when people with no brains keep adding more and more to the tax code.

    Comment by Scott — October 28, 2011 @ 12:12 pm

  2. #1, there are many cliffs like that in the tax code, and yes, it shows how crazy it is.

    Comment by TBlumer — October 28, 2011 @ 12:44 pm

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