07.31.2009 0

Health Care Compromise A Poison Pill For Small Business

  • On: 08/13/2009 09:27:09
  • In: Health Care
  • By Howard Rich

    Much ado has been made of the tenuous “compromise” between President Barack Obama and “Blue Dog” Democrats in Washington on the issue of government-run health care. Sadly, the reality is that the latest version of “Obamacare” is still a poison pill for America’s small businesses and the millions of workers they employ.

    Most small businesses spend between 60 and 80 cents of every dollar they earn on payroll, which is precisely where Obama’s plan would hit them. Not content with simply bleeding “the rich” to pay for the massive up-front costs of his $1.5 trillion socialized medicine proposal, Obama also wants to impose a massive new tax increase on American small businesses – one that will directly impede their ability to create jobs and stimulate economic activity.

    In other words, Obama wants to choke off America’s number one job-creating engine in the depths of a recession that has already cost millions of jobs – all so he can create a government health care monopoly that will not only increase costs but also reduce the quality of care.

    That’s a recipe for disaster, not real reform, and yet Obama continues to use rhetoric to mask his true intent. For example, in proclaiming a “National Small Business Week” three months ago, Obama touted small businesses as “the lifeblood of cities and towns across the country.”

    “(Small businesses) help enhance the lives of our citizens by improving our quality of life and creating personal wealth,” Obama said. “Small businesses will lead the way to prosperity, particularly in today’s challenging economic environment.”

    Obama further claimed that he supported “economic policies that encourage enterprise” and “tax policies that promote investment in small businesses.”

    Unfortunately, Obama’s rhetoric of support for small businesses has been accompanied by policies that threaten to put them “out” of business. For example, while state and local government bureaucracies have been bailed out to the tune of hundreds of billions of dollars, small businesses remain overtaxed and frozen out of credit markets.

    So much for “stimulating Main Street.”

    With his socialized medicine proposal, however, Obama is attempting to erect the most sizable roadblock yet in the path to small business prosperity in America.

    In addition to imposing a new surtax on the “wealthiest Americans” – including the sixty percent who report income from small businesses or partnerships – Obama’s plan would also force a new tax hike directly on the backs of small businesses with annual payrolls of $500,000 or more.

    According to data released by the U.S. Small Business Administration, the small businesses that would be affected by the latest “Obamacare compromise” employ 70% of all small business employees in America – or 42.3 million workers.

    Even worse, the new small business tax rises dramatically – and quickly – the more a company expands its payroll. In fact, small businesses with payrolls of $750,000 or higher would have to pay 8% of that total cost to the government. This would create a direct disincentive to economic growth and job creation. After all, why would a small business add employees (i.e. additional payroll expenses) if it meant incurring a higher tax rate?

    At the same time small businesses are absorbing this new tax, they would be sending a steady stream of new “customers” to the government-run plan, which would force nearly 84 million Americans out of their current health coverage, according to a new study by the Lewin Group.

    Simply put, Obama’s plan would force small businesses to pay for in a way that would directly impede their ability to create jobs and stimulate economic activity. In addition to going against everything this nation was founded on, that’s something America’s small businesses simply cannot afford.

    Howie Rich is the Chairman of Americans for Limited Government.

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