THE PELOSI JOBS TAX
July 31, 2009
Many Democrats are revolting against House Speaker Nancy Pelosi's 5.4 percent income surtax to finance ObamaCare, but another tax in her House bill isn't getting enough attention. To wit, the up to 10 percentage point payroll tax increase on workers and businesses that don't provide health insurance. This should put to rest the illusion that no one making less than $250,000 in income will pay higher taxes, says the Wall Street Journal.
To understand why, consider how the Pelosi jobs tax works:
- Under the bill, firms with employee payroll of above $250,000 without a company health plan would pay a tax starting at 2 percent of wages per employee.
- That rate would rise to 8 percent on firms with total payroll of $400,000 or more.
- A tax credit would help very small businesses adjust to the new costs, but even a firm with a handful of workers is likely to be subject to this payroll levy.
So who bears the burden of this tax? Workers. Employers merely collect the tax and then pass along its costs in lower wages or benefits, says the Journal:
- In actual dollars, a worker earning, say, $70,000 a year could lose some $5,600 in take home pay to cover the costs of ObamaCare.
- This is in addition to the 2.5 percent tax that the individual worker would have to pay on gross income, if he doesn't buy the high-priced health insurance that the government will mandate.
- Many workers and firms would have to pay the Pelosi tax even if the employer already provides health insurance.
To put it another way, the workers who will gain health insurance from ObamaCare will pay the steepest price for it in either a shrinking pay check, or no job at all, says the Journal.
Source: Editorial, "The Pelosi Jobs Tax," Wall Street Journal, July 30, 2009.
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