Wednesday, February 05, 2014

ObamaCare Is a Classic Dependency Trap

The CBO report that is making waves (and the comedic response of the Lightworker Administration) reveals that ObamaCare can potentially, due to increasing marginal tax rates for work for low income workers, trap people in dependency.  Here is the WSJ's analysis:
The law's insurance subsidies are gradually taken away as income rises, "creating an implicit tax on additional earnings," the CBO observes. These effective marginal tax rates reduce the rewards for work—whether it be overtime, accepting a promotion, or training in the hope of higher future earnings. CBO doesn't note, though we will, that simply extending "free" coverage skews job search decisions by offering an in-kind bonus for unemployment.
This is fundamental problem that welfare state politics imposes on society and we've been down this road before.  There are numerous examples of effectively forced dependency from which we should have learned our lessons.  We did here with welfare.  They did it in the UK with "the dole".  In fact, there is an episode of Milton Friedman's Free to Choose that focuses in on a man in Northern Ireland who would earn less for his family if he went back to work rather than stay at home and loaf about. 

This is a classic policy failing that we should be well beyond making anymore, but with the Obama administration and its fellow travelers in the progressive movement, nothing is shocking.


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