From Economics Professor Casey Mulligan writing in the New York Times. The whole article is well worth your time to read.
The emphasis is mine.... Even though the consequences of the law have been debated at least as far back as 2009, the law’s advocates have yet to acknowledge the new implicit employment tax, let alone estimate the number of people who will face it.
But in a recent paper, the Congressional Budget Office has joined me in explaining that it’s not just the implicit income tax that will contract the labor market. As the paper puts it, “The loss of subsidies upon returning to a job with health insurance is an implicit tax on working,” adding that the effect of the new tax is “similar to the effect of unemployment benefits” (see Page 120).
Once we consider that the new law has an employer penalty, too, the labor market will be receiving three blows from the new law:
Regardless of how few economists acknowledge the new employment tax, it should be no surprise when the labor market cannot grow under such conditions.
- the implicit employment tax,
- the employer penalty and
- the implicit income tax.
