Is it possible that working more could actually cost you money? The notion seems impossible, but under the subsidies and penalties of the Affordable Care Act, up to 11 million Americans could find themselves in this situation, concludes University of Chicago economist Casey Mulligan.
Mulligan’s latest paper, just out from the National Bureau of Economic Research, estimates the effective marginal taxes on work created by Obamacare. Entitled The ACA: Some Unpleasant Welfare Arithmetic, it extends the analysis of his book, The Redistribution Recession, which evaluates the effects of transfer payments on the effective tax rates of Americans choosing whether to work or stay home. Mulligan found that effective marginal tax rates for low-income Americans could reach 40 percent to 60 percent as they lost benefits such as unemployment insurance, food stamps, and Medicaid when they entered employment.
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