October 8, 2009
While the bill produced by Finance Committee Chairman Baucus is being portrayed by some media outlets as a "moderate compromise," in reality the legislation provides a significant disincentive for employers to hire low-income parents-an anti-family provision penalizing couples, single mothers, and middle-class children nationwide:
- The Baucus bill requires firms with more than 50 employees that do not offer coverage to pay for the cost of any "low-income" health insurance subsidies provided to their workers. Under the bill, families with income up to four times the federal poverty level ($88,200 for a family of four) could qualify for partial subsidies. The tax imposed on businesses would equal the cost of the subsidies or $400 multiplied by the total number of employees at the firm, whichever is less.
- Because the amount of the "fair share" contribution required by employers depends on the type of coverage being subsidized-individual or family coverage-the liberal Center for Budget and Policy Priorities notes that the Baucus bill, by increasing the "fair share" taxes paid by firms for family coverage, would discourage employers from hiring married individuals or parents raising children. In particular, single parents would be much more likely to qualify for insurance subsidies based upon their income, making it much less likely that such workers would be hired.
- The liberal Center for Budget and Policy Priorities also notes that the Baucus bill "likely would have discriminatory racial effects on hiring and firing. Because minorities are much more likely to have low family incomes than non-minorities, a larger share of prospective minority workers would likely be harmed."
- Amendments adopted in the Committee markup-which lowered the affordability threshold allowing individuals to opt-out of employer plans and obtain subsidized coverage in the Exchange-would exacerbate the underlying problem, by raising the likelihood that middle-income families would rely on federal subsidies-thus triggering "fair share" penalties against their employers.
- Other independent studies have also confirmed the impact of new taxes on jobs-i.e., employer mandates-on low-wage workers. For instance, the Congressional Budget Office noted that, "a pay-or-play provision could reduce the hiring of low-wage workers, whose wages could not fall by the full cost of...a substantial pay-or-play fee if they were close to the minimum wage." Harvard Professor Kate Baicker has also published an analysis demonstrating that at least 5.5 million low-wage workers would be "at substantial risk of unemployment" due to new mandates on employers-and that minority workers were twice as likely to lose their jobs as their white counterparts as a result.
Many may be concerned by the unfair implications of the Baucus bill's "fair share" contribution. At a time when unemployment stands at 26-year highs-and with job losses still rising-this Democrat proposal would serve as not only a tax on jobs, but another "marriage penalty" against families that will provide a significant obstacle for working parents seeking to improve the lives of themselves and their children.
For additional information, contact:
The House Republican Conference Policy Office