Business
C4 Report: Stop the HIT
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Recently I received a letter from the US Chamber of Commerce on some of the tax consequences due to the “Patient Protection and Affordable Care Act”. Much of what was passed was done so without consideration to the hard working Americans that own small businesses. Some of our U. S. Representatives and Senators are working hard to repeal portions of this policy. If ever there was a time to get behind these leaders and to support our local small businesses, it is now! I offer this letter for your consideration.
“STOP THE HIT”
As with many of the other excise taxes included in the Patient Protection and Affordable Care Act (PPACA), the health insurance tax (“the HIT”) will not only affect access to coverage, but it will affect jobs and our economy.
Small businesses account for half of private sector employment and two-thirds of the net new private sector jobs created in the United States.
The Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO) have reported that this tax will be shifted to consumers (small and family-owned businesses and individuals – those who already have the hardest time affording coverage) in the form of higher premiums.
Unlike most taxes, PPACA dictates an aggregate amount that must be collected each year as a result of this tax: $8 billion in 2014, growing to $14.3 billion by 2018 and indexed for inflation thereafter. The cost is $101.7 billion in the first 10 years alone.
This is money that could be spent paying employees higher wages, purchasing equipment, and hiring more employees – investments that would grow the economy and get more Americans back to work.
The tax will impact:
* 2 million (or 87%) of small businesses (business defined as those with fewer than 500 employees);
* 12 million employees and the self-employed who purchase coverage in the individual market, and;
* 26 million employees who are covered by their employer.
For the average employee with a family plan, his or her take-home pay will be reduced (because of having to pay higher premiums) by nearly $5,000 over the next 10 years.
In 10 years, the tax will lead to a loss of up to 250,000 jobs – nearly 60% of which will be in the small business sector, as well as the loss of U.S. sales of up to $30 billion, half of which would have been
made by small businesses.
It will increase employee benefit costs by 15% for small businesses. According to Health Affairs, small businesses already pay on average 18% more than larger businesses do for the same benefits.
The tax will cost each family about $500 per year, increasing premiums by as much as 3% and costing nearly $5,000 per family over the next 10 years, and assumes that employers shoulder 75% of the cost sharing.
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