Jed Graham on the Affordable Care Act’s Impact on Work Incentives

Jed Graham of Investor’s Business Daily has a rundown of the four “cliffs” in the Affordable Care Act that will impact firms and workers:

The Congressional Budget Office has estimated ObamaCare will “reduce the amount of labor used in the economy by roughly half a percent” — about 800,000 full-time jobs. It seems likely that four especially steep cliffs — including two where marginal tax rates can approach 100% or more — will factor into work and hiring decisions.

The cliffs Graham has in mind are those facing firms as they decide to expand from 49 to 50 employees (hiring the 50th employee will kick in various penalties); for households earning 200 percent of the poverty level (earning an additional dollar will entail a substantial loss of subsidies); for households earning 400 percent of the poverty level (earning an additional dollar will once again entail a substantial loss of subsidies); and individuals reaching the early retirement age of 62 (subsidies for workers exiting the workforce will be far more generous than for those who continue to work). Jed’s post is fascinating, and I strongly recommend taking a look

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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