Health “Reform” for Small Businesses: Higher Taxes, Fewer Workers
The New York Times has an article this morning on a Mercer study released last month. The Mercer analysis surveyed 3,000 employers and found that more than a third (38%) may be offering coverage considered “unaffordable” for at least some workers, triggering tax penalties under the new law. As the article points out, the employer mandate tax penalties “could affect far more employers than Congress had assumed” – raising taxes across a broad spectrum of businesses. What’s more, if those businesses do not know their workers’ household income to determine whether or not their coverage is “affordable,” they may be socked with a major surprise in the form of higher tax penalties at year’s end.
Separately, the Hill reports on a National Center for Policy Analysis report highlighting how the marginal impact of the tax credit will discourage firms from hiring additional workers. For instance, NCPA estimates that hiring a 21st worker will result in a loss of $3,733 in tax credit subsidies – a factor firms will consider in deciding whether or not to add new employees. And the credit is phased out entirely for small businesses with more than 25 workers, meaning the 26th employee hired will cause the firm to lose the credit entirely.
With unemployment hovering near 10 percent and approaching 26-year highs, raising taxes on firms struggling to provide coverage and discouraging small businesses from hiring new workers is exactly the kind of “reform” the American economy did NOT need.