Average Marginal Labor Income Tax Rates Under the Affordable Care Act

65 Pages Posted: 30 Aug 2013

See all articles by Casey B. Mulligan

Casey B. Mulligan

University of Chicago; National Bureau of Economic Research (NBER)

Date Written: August 2013

Abstract

The Affordable Care Act includes four significant, permanent, implicit unemployment assistance programs, plus various implicit subsidies for underemployment, and expanded Medicaid eligibility for adults. Every sector of the economy, and about half of nonelderly adults, is directly affected by at least one of those provisions. This paper calculates the ACA's impact on the average reward to working among nonelderly household heads and spouses. The law increases marginal tax rates by an average of five percentage points (of employee compensation), on top of the marginal tax rates that were already present before it went into effect. The ACA's addition to labor tax wedges is roughly equivalent to doubling both employer and employee payroll tax rates for half of the population.

Suggested Citation

Mulligan, Casey B., Average Marginal Labor Income Tax Rates Under the Affordable Care Act (August 2013). NBER Working Paper No. w19365. Available at SSRN: https://ssrn.com/abstract=2318268

Casey B. Mulligan (Contact Author)

University of Chicago ( email )

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National Bureau of Economic Research (NBER)

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