03/24/2014
It's a business owner's nightmare: New legislation unleashes a new round of taxes. As the Affordable Care Act rolls out following a years-long raucous debate over its legitimacy, businesses aren't sure what the impact will be. That's because it's virgin territory. Americans have never been down the road of mandatory health insurance until now.
All taxes inevitably create incentives to pursue or refrain from certain economic activity. Since the tax law is new, we don't really know what clever strategies taxpayers will undoubtedly devise to work around the new tax law.
One thing we do know is that new taxes change behaviors as soon as taxpayers understand how the winds of commerce have shifted in response to the new tax. Every new tax creates incentives and disincentives and government officials don't always know how it's going to play out. (That's one reason why new taxes are often tweaked and sometimes even repealed, because of the negative impacts following implementation of legislation.)
In the case of the Affordable Care Act, one blogger notes that contrary to the hype surrounding the legislation, only a small number of American citizens will actually get a subsidy. The Congressional Budget Office calls attention to the fact that the ACA is nothing less than a 'tax on working.' Analysts are worried the new tax burden will suppress U.S. economic growth.
On the micro-economic level, some taxpayers will get slammed and others will get something that looks very close to a free ride. That's why it's likely Obamacare will go through numerous changes over the coming years. If history repeats itself, new laws tweaking the legislation will sprout like weeds. Stay tuned.
A new tax created by the Affordable Care Act and little noticed to date is likely to have significant impact on the labor market, an economist writes.
