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Friday, May 03, 2013 4:04 PM


Obamacare Affects Part-Time Employment Yet Again; Nullification Bill Passes South Carolina House; Analysis of Healthcare Penalty Rates


Obamacare and Part-Time Jobs Yet Again

At a business level, the penalty for not offering a qualified healthcare plan is $2,000 per person, for companies that have more than 30 full-time employees. 

As I have discussed before, Obamacare is behind the surge in part-time employment as corporations have been cutting hours worked and hiring more part-time workers to make up the difference.

Part-time employment rose this month by a whopping 441,000 as private average weekly hours fell 0.2 to 34.4 hours and average weekly earnings fell from $824.52 to $821.13 due to fewer hours worked.

For details see Jobs +165,000, Part-Time Employment +441,000; Unemployment Rate 7.5%; Dow Tops 15,000

Nullification Bill Passes South Carolina House

A constitutional showdown may be coming up as South Carolina House passes bill making ‘Obamacare’ implementation a crime.

The South Carolina state House passed a bill Wednesday that declares President Obama’s Patient Protection and Affordable Care Act to be “null and void,” and criminalizes its implementation.

The state’s Freedom of Health Care Protection Act intends to “prohibit certain individuals from enforcing or attempting to enforce such unconstitutional laws; and to establish criminal penalties and civil liability for violating this article.”

The measure permits the state Attorney General, with reasonable cause, “to restrain by temporary restraining order, temporary injunction, or permanent injunction” any person who is believed to be causing harm to any person or business with the implementation of Obamacare.

Earlier this year in her state of the state address, Gov. Nikki Haley said that South Carolina does not want and cannot afford the president’s plan, “not now, not ever.”

“To that end, we will not pursue the type of government-run health exchanges being forced on us by Washington,” she said. “Despite the rose-colored rhetoric coming out of D.C., these exchanges are nothing more than a way to make the state do the federal government’s bidding in spending massive amounts of taxpayer dollars on insurance subsidies that we can’t afford.”
IRS the Enforcer

The court ruled Obamacare a tax because the IRS collects the penalty if people opt out of the system. The penalty will come on Federal income tax returns. Still, it will be curious to see precisely how this would be handled.

Analysis of Penalty Rates

Aside from South Carolina, who will opt out of the system, and what happens then? The answer involves a comparison of various penalty rates.

At an individual level, Fact Check notes the minimum penalty for not having insurance in 2014 is a mere $95. Government will probably waste far more than that attempting to figure out who has insurance and who doesn't.

For 2014 anyway, regardless of what South Carolina does or does not do, low income people will likely opt out across the board if their employer does not provide insurance.

The minimum penalty for 2015 will be $325 and for 2016 and beyond, $695 indexed per inflation.

Fact Check notes the tax is higher for higher incomes "But the penalty can never exceed the cost of the national average premiums for the lowest-cost bronze plans being offered through the new insurance exchanges called for under the law."

For a couple making $100,000, income thresholds might mean a combined penalty of about $2,000 compared to insurance costs of roughly $10,000 for family coverage based on models for state exchanges.

At upper income levels, healthy people may compare the cost of insurance with higher penalties and make the decision to opt out.

Here is an interesting point: "The law prohibits the IRS from seeking to put anybody in jail or seizing their property for simple refusal to pay the tax. The law says specifically that taxpayers “shall not be subject to any criminal prosecution or penalty” for failure to pay, and also that the IRS cannot file a tax lien (a legal claim against such things as homes, cars, wages and bank accounts) or a “levy” (seizure of property or bank accounts)."

In addition to encouraging more part-time work, the law as written is begging for noncompliance regardless of what states like South Carolina do.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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