Diary

Obama to Tax Code: LOL

Barack Obama and the Democrats are pushing hard to pass health care legislation. The bill, if enacted, would force all Americans to purchase health insurance whether they want it or not. It would also cover a lot of people who aren’t covered today although we cannot go so far as to say that everyone would be covered. The bill currently being rushed through the legislative sausage making process would leave appoximately 23 million people uninsured. But lets not get caught up on the details.

What we do know is that this will be extremely expensive. If history is to be our guide, the CBO was wrong when they scored Medicaid. So wrong in fact that they underestimated the cost by 37 times. Yes, you read that correctly, Medicaid has cost 37 times more than the CBO estimated. So with that little nugget of information, what will Obama and the democrats in Congress do to pay for this massive expansion of the welfare state?

They’re going to violate accepted historical tax policy.

From Michael Cannon at the Cato Institute:

under current law, the federal income tax rate rises from 10 percent to 15 percent once a single filer’s taxable income exceeds $8,350.26 If taxable income is $8,400, then the first $8,350 is taxed at the 10-percent rate (tax: $835), and the marginal $50 is taxed at the 15-percent rate (tax: $7.50), for a total tax liability of $842.50.

If the income tax were to operate like the Democrats’ mandate tax, then earning $50 above the threshold would subject all $8,400—not just the marginal $50—to the 15-percent rate. That marginal $50 would therefore cause the worker’s tax liability to jump not by $7.50, but by $425.27 The actual marginal tax rate applied to that $50 would not be 15 percent, but 850 percent. In the same manner, the House and Senate bills would create marginal tax rates that exceed the statutory mandate-tax rates.

And who says that Democrats aren’t in there working for the American people?

crossposted to The Ritz Report