“at the tail end of 2019, Congress repealed three significant components of Obamacare.
The three repealed provisions were all taxes, each of which was included in the initial legislation as a way of raising revenue to pay for the hundreds of billions in spending the law called for. By far the biggest of the three was the so-called Cadillac tax, which was expected to raise about $197 billion over the next decade. Congress also nixed the law’s health insurance tax, projected to raise $150 billion over 10 years, and the medical device tax, projected to raise $25.5 billion. All three taxes were eliminated as part of a $1.4 trillion year-end budget bill that President Trump signed at the last possible minute in order to keep the government open.”
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“The elimination of three health care taxes will increase the deficit by $373 billion.”
“In a recent paper on the issue, my Mercatus Center colleagues Matthew Mitchell and Michael Farren did the math and found that “the $3.6 billion in taxes needed to fund the subsidies will likely decrease Wisconsin’s long-run GDP by about $20 billion over the 15-year life of the handout. And this estimate doesn’t include the local utility infrastructure, and federal subsidies that total another $1.4 billion.” These numbers are harder to sell to taxpayers than the la-la land ones we hear about before every big subsidy deal.”
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“A new paper in the Journal of Economic Perspectives by Cailin Slattery of Columbia University and Owen Zidar of Princeton University looks at state and local business tax incentives and finds yet again that narrow, firm-specific tax breaks aimed at attracting businesses and boosting employment aren’t the way to go. The study shows that larger, more profitable companies are more likely to get bigger handouts. The largest deals benefit the recipients, according to their research, but not the overall state economy.”
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“This study is only one of many on the topic. They all find that these narrowly targeted subsidies don’t work as advertised and are typically counterproductive. Unfortunately, a slogan like “subsidized projects aren’t worth the money you pay for them” doesn’t make for a great sound bite at ribbon-cutting ceremonies.”