ObamaCare will reduce work hours equivalent to 2 million
jobs in the next decade amid a host of incentives not to work or to work less,
a new Congressional Budget Office (CBO) report says -- the latest blow to
President Obama’s signature health insurance plan.
The report estimates the Affordable Care Act, or ACA,
will make the labor supply shrink by 0.86 percent in 2025. This amounts to a
shrinkage equivalent to approximately 2 million full-time workers.
The nonpartisan CBO estimates that the decline will come
primarily due to workers responding to changes made by the law to federal
programs and tax policy. The agency points to the introduction of health care
subsidies tied to income as a key factor -- which in turn raises effective tax
rates as someone’s earnings rise, therefore reducing the amount of work
Americans choose to do.
“Subsidies decline as income increases, reducing the
return on earning additional income,” the report says. “That decline is
effectively an increase in recipients’ effective marginal tax rate, so it
generally reduces their work incentives through the substitution effect.”
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