The Politics of Taxes in the Affordable Care Act

The Affordable Care Act includes taxes on medical providers and insurance companies — taxes that make healthcare more expensive. As MIT Professor Jonathan Gruber (one of the ACA’s architects) said, the “lack of transparency” of these obscure taxes “is a huge political advantage.” This chapter shows that when the revenue-raising tools for a policy plan are hidden from voters, the project will appear to be a better deal for taxpayers than it actually is. The ACA’s revenues include the individual mandate as well as taxes on healthcare providers and insurance companies rather than taxes applied directly to consumers. While the ACA is a highly visible and controversial piece of legislation, a study of its revenue systems provides broad lessons on tax policy. Politicians who are seeking to appear as if they are providing constituents with large benefits at a reasonable price will attempt to obscure the cost of the programs they implement, reducing transparency in the process.

via The Politics of Taxes in the Affordable Care Act by Randall G. Holcombe :: SSRN

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