The taxes Mulligan is describing are "implicit marginal tax rates," defined as "the extra taxes paid, and subsidies forgone, as the result of working." There should be no surprise, Mulligan notes, as legislation which taxes jobs and incomes should result in less income and fewer jobs. Why? This tax increase cuts the return to work by 10%. As a result, the labor supply declines 5% and the economy contracts approximately 2%.
So, it may be asked: With a labor participation rate of only 63%, why would a Democratic Congress pass and a Democratic President sign a heathcare policy knowing full well that it will cut the return to work by 10%?
The answer: To put more people on the federal dole--those so-called "entitlements"--and make it more difficult for them to get it.
Let the discussion begin...
To read Casey Mulligan's study, click on the following link: