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Friday, January 21, 2011

More "Social Justice" surprises for the middle class-more taxes

This article from Investor's Business Daily explains one of the counter-intuitive quirks of the tax increases which are part of PPACA.

New taxes kick in in 2013 for households with incomes over 250K ( 200 for a single filer); a 0.9% wage and salary tax and a 3.5% tax on some investment income.The article's authors walk the reader through what happens to families in three income ranges and oddly enough those in the middle of the three ranges are taxed more than the higher range group for an increase in their income, as might occur if one of the two spouses receives a job promotion or work extra. Nothing like a good partially regressive tax to sock folks in the face with some some hard hitting anti-productive social justice.Readers might recall that after PPACA was signed, we were told by Senators and some medical organizations ( you know who you are) that social justice was served.

A broader analysis of taxes and PPACA is offered by the Harvard economist,Greg Mankiw. His plan to decrease the deficit is for the government to give him one billion dollars and increase taxes by three billions.This reduces the deficit by 2 billion. He then relates this scheme to the arguments made about PPACA.

"Healthcare reform, its advocates tell us, is fiscal reform. The healthcare reform bill passed last year increased government spending to cover the uninsured, but it also reduced the budget deficit by increasing various taxes as well. Because of this bill, the advocates say, the federal government is on a sounder fiscal footing. Repealing it, they say, would make the budget deficit worse."

Professor Mankiw, in a more serious moment, refers readers to this article that explains how repeal of PPACA will not increase the deficit.That a repeal will increase the deficit is the latest argument from some of those who continue to support PPACA, the social justice argument getting a bit stale,now that the bill is passed and we are finding out what is in it.

1 comment:

Andrew_M_Garland said...

--> Romer is Theoretically Correct

How The CBO Scores Congressional Legislation:
A fly on the wall:

CBO: The MedHelp bill spends $1 trillion and increases what you must borrow, the deficit, by $270 billion.
Politician: What if I tell you that we will stop paying as much for Medicare services, saving an additional $500 billion?

CBO: Can you really do that?
Politician: Just assume that I can. I'll write it into the margin.

CBO: Then, the bill spends $1 trillion and reduces the deficit by $230 billion. It raises taxes by $730 billion, and saves $500 billion on Medicare.

Press Conference: The bi-partisan, non-partisan, mathematical, unbiased, technoid, trustworthy, very smart CBO has just scored the MedHelp bill. Ladies and Gentlemen and Republicans, this bill delivers medical help to everyone, and reduces the deficit by $230 billion. How could any intelligent person be against it?

Definition: non-partisan adj. A person or organization wanting greater influence by claiming a higher morality. Similar to "non-lying". There are some rare cases where the term can be applied without laughing. For example, the need for at least a little reliable information has supported some non-partisan data gathering and statistical analysis. Whether or not reliable, data is little used in political decisions.

NY Times and Washington Post: CBO Numbers Stink
03/19/10 - The Lid by Sammy Benoit
[edited] Democrats worked with the nonpartisan Congressional Budget Office for more than a year, fine-tuning the bill in the last weeks. And, they consulted repeatedly with the bipartisan staff of the Joint Committee on Taxation.

The CBO found that cost and deficit targets would be missed. So, Democrats adjusted parts of the legislation to meet their goal.

Here are two of their tricks.
() The first ten years of increased taxes are applied to only six years of costs.
() $500 billion of Medicare savings are counted twice.