Several articles today highlight the cost of ObamaCare to employers and small businesses.
The House Health Fix: Even Higher Tax Penalties for Employers
by John Ligon and Robert A. Book, Ph.D.
The Heritage Foundation
3/19/2010
Under House Reconciliation Act of 2010 (H.R. 4872), employers will face even greater penalties than mandated by earlier versions of “health care reform” legislation, such as H.R. 3590. Specifically, employers with more than 50 workers that do not offer a “qualified” health plan or pay 60 percent of health insurance premiums would face an annual tax penalty of $2,000 per full-time worker.
Moreover, companies with 50 or more workers that hire from low- and moderate-income families who qualify for, and elect to accept, premium subsidies would have to absorb an additional $3,000 per employee per year tax penalty—even if those companies already offer health insurance.
Both of these penalties would dramatically affect the way companies direct their allocation of labor. For instance, these tax penalties would discourage companies from hiring new workers, particularly individuals who are likely to be in low-income families.
The Employer Mandate Penalties in H.R. 4872
To help pay for the massive price tag of the legislation, lawmakers have raised the tax burden that companies would face compared to H.R. 3590 (the Senate-passed health bill). H.R. 4872 would force companies to pay a tax penalty if that company employs 50 or more workers and as soon as one worker qualify for, and opts to accept, a health insurance premium subsidy. The definition of a large business as one with more than 50 employees will surprise many businesses that, until now, never realized they were such a large enterprise. Indeed, local restaurants and other similar service businesses can easily exceed the 50-employee threshold.
Essentially, companies with more than 50 workers that do not offer health insurance coverage—or pay at least 60 percent of the premiums for all full-time workers—will have to pay $2,000 per worker for all workers beyond the first 30 workers. Moreover, companies would face an additional tax penalty equal to $3,000 per full-time worker per year for every full-time worker that qualifies for a premium subsidy for health insurance coverage.
Changing the Way Businesses Hire
If the House reconciliation bill is enacted, there are three primary implications for businesses looking to hire low- and moderate-income workers.
Health care bill would increase wage taxes, add new levy on investments for high earners
Stephen Ohlemacher
Washington Examiner
3/19/10
WASHINGTON — High-income families would be hit with a tax increase on wages and a new levy on investments under President Barack Obama’s health care overhaul bill.
For the first time, the Medicare payroll tax would be applied to investment income, beginning in 2013. A new 3.8 percent tax would be imposed on interest, dividends, capital gains and other investment income for individuals making more than $200,000 a year and couples making more than $250,000.
The bill also would increase the Medicare payroll tax by 0.9 percentage point to 2.35 percent on wages above $200,000 for individuals and $250,000 for married couples filing jointly.
The new tax on investment income is higher than the 2.9 percent tax proposed by Obama. House Democratic leaders increased it so they could reduce the impact of a new tax on high-cost health insurance plans strongly opposed by labor unions.
The 40 percent tax on health benefits would be delayed until 2018 and would apply only to premiums exceeding $10,200 a year for individuals and $27,500 for families.
The search for revenue to pay for health care has been made more difficult by Obama’s campaign pledge not to raise taxes on the middle class. The result is a bill that would raise a total of $438 billion in new taxes over the next decade, mainly from high-income taxpayers and fees on the health care industry.
Taxing the rich to pay for health insurance would represent a significant departure from the way Americans have financed safety net programs in the past.
This article continues at the Examiner.
Equipment Maker Says Health Care Bill Would Cost It $100 Million in First Year
FoxNews.com
3/19/10
Caterpillar, the heavy-equipment maker that President Obama cited last year in making his argument for a massive economic stimulus package, is opposing the health care bill nearing final passage, saying the bill would ramp up the company’s operating costs by $100 million alone in the first year and imperil coverage for its 150,000 employees and retirees.
In a letter Thursday to House Speaker Nancy Pelosi and Minority Leader John Boehner, and provided to FoxNews.com, the Peoria, Ill.-based company urged lawmakers to vote against the bill, citing provisions in it — such as new coverage mandates and the taxation of Medicare subsidies for prescription drugs — that would drive up its health care costs by more than 20 percent.
“In our fragile economy, we can ill-afford cost increases that place us at a disadvantage versus global competitors that are not similarly burdened,” Gregory Folley, vice president of the company, wrote.
“As one of America’s leading manufacturing companies and exporters, we’re disappointed that efforts at reform have not addressed the cost concerns we’ve raised throughout the year,” he said. “And we strongly believe the current legislation is not in the best interests of Caterpillar or the more than 150,000 employees, retirees and dependents that we cover.”
The company’s estimate of $100 million is the equivalent of about an additional $55 a month for each of 150,000 workers.
The article continues at FoxNews.com
Is this anyway to “stimulate” the economy? Can companies afford to hire or keep employees? Will you have a job a year from now? Ask yourself, “When was the last time a poor person hired me?” And then ask yourself why any administration would focus on taking over the health care industry at the expense of focusing on strengthening the American economy.
