Worst Tax Ever Update

Robert Waldmann

is going to obsess about one sentence in Obama’s vital health care speech “Likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers.” This doesn’t say anything new, but it worries me. The problem is that it sounds vaguely like the Baucus gang of six worst tax ever proposal.

“… these businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own.”

If “the cost” is replaced by “the cost to the federal government” then Obama’s reasonable statement becomes an endorsement of this terrible idea. The Baucus 6 proposal would give firms an incentive to hire people only from high income families, to keep jobs from those who really need them as I explained on July 27.

I naively assumed that such a deeply stupid idea would be quietly abandoned as soon as this was explained, but I was wrong.

It is in the final Baucus proposal.

Also it appears to Steven Pearlstein of the Washington Post that the ultra-key senator Olympia Snowe (R-sane) is particularly fond of it.

An equally silly compromise comes from the Senate’s “Gang of Six,” which seeks to avoid riling the local chamber of commerce with a mandate that all businesses contribute something toward health insurance for their workers. Instead, the centrists would only dun employers for whatever subsidies their low-income workers need to help them meet their new obligation to buy health insurance. Aside from creating an administrative nightmare, this provision would have the perverse effect of encouraging employers to fire, or not to hire, low-wage workers with children or spouses who are unemployed. Republican Olympia Snowe is said to be particularly enamored of this idea. I’d bet a two-pound lobster and bowl of Maine’s best chowder that she can’t find a labor economist back home who thinks this is a good policy.

I think the argument against the proposal might have first been made here at angrybear. No one links to us. The argument is made here here here and here.