CBO Ignores 'Implicit Tax' Negative Economic Effects In Scoring Baucus Health Bill

The Congressional Budget Office, by budget scoring convention, ignores the economic effects of the increases in marginal tax rates in the Baucus health bill, according to Harvard economics professor Greg Mankiw.

He shows that the 'implicit tax' in the phase out of the subsidies in the Baucus bill amounts to an additional income tax in the low 20 percent range on top of all existing taxes.

Mankiw's conclusion:

households facing an increase in marginal tax rates ... will not ignore them. This means that the healthcare reform bill will likely have a more adverse budgetary impact than CBO estimates.

Read Mankiw's blog post, "Marginal Tax Rates from Health Reform."

Read CBO's analysis of the "America’s Healthy Future Act of 2009" and letter to Chairman Baucus here.