A letter writer from Aitkin recently claimed that economist Bruce Bartlett (ex-GOP-economist, cum neo-Keynesian) has “punctured” the claim that the tax increases for Obamacare will fall on the middle class. This would be news
to the Congressional Budget Office, which estimated that those with incomes of $120,000 or less will pay 45 percent of the total taxes for failing to insure, and that people falling within this group will represent 76 percent of those paying the penalty tax. Further, the total tax increase on these middle class taxpayers is estimated to be $2 billion. (Congressional Budget Office, “Selected CBO Publications Related to Health Care legislation, 2009-2010,” December 2010, p. 73, http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/120xx/doc12033/1...).
Of course, the tax for failing to insure is only one of the taxes associated with Obamacare that will fall on the middle class. There is also the 10 percent tax on tanning services, the 2.3 percent excise tax on medical equipment, the 40 percent tax on comprehensive health coverage on so-called “Cadillac” health plans (that’s right, there will now be a penalty if you are too well insured), and new taxes that will apply to Flexible Savings Accounts and Health Savings Accounts.
As for Bartlett’s absurd assertion that there is no market feedback no matter how high the government raises taxes, even a non-economist can see that this is obviously false. If every dollar you earned were confiscated by the government, how hard would you work? Obviously, there is a point at which you will not be as productive if you are taxed at too high a rate, and anyone who is honest with him or herself knows that instinctively.