CBO has just released some new tables that demonstrate the increase in marginal tax rates inherent in the Baucus healthcare reform bill. CBO doesn’t directly show the marginal tax rates, but, if I am interpreting the tables correctly, a little bit of arithmetic gets you from CBO numbers to marginal tax rates pretty fast. These figures apply to workers buying their health insurance on the newly created exchanges with the newly offered subsidies.

According to the CBO, a family of four making $54,000 would pay $4,800 for health insurance. The rest of the premium would come from government subsidies. If the family’s income rises to $66,000, the subsidy falls, and the cost of health insurance rises to $7,600. In other words, earning an additional $12,000 requires the family to pay an additional $2,800. The implicit marginal tax rate is $2,800/$12,000, or 23 percent.

Similarly, a single person earning $26,500 would pay $2,300 for health insurance, but if his income rises to $32,400, his premium rises to $3,700. This yields an implicit marginal rate rate of 24 percent.

You get somewhat different numbers at other income levels. Typically, however, the implicit marginal tax rates are around 20 percent. Those figures for marginal tax rates are, of course, added on top of those already imposed by existing income and payroll taxes.

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