An effort to help revive the economy by repealing a burdensome tax on America’s small businesses seems to be gaining some momentum.
Today, representatives of the small business community from around the country testified at a House Subcommittee on Health and Technology hearing on the impact the health insurance tax, or HIT, will have on small business employers. Given this tax is a direct result of the President’s health care law, policymakers are rightfully looking into its impact on America’s primary job creators, and the outlook is discouraging.
For starters, the HIT singles out health insurance policies purchased on the fully-insured market where eighty-eight percent of small business owners purchase their coverage. Not only will this tax be shifted to small businesses, but it will also raise the cost of health care for their employees. A study by former Congressional Budget Office director Douglas Holtz-Eakin shows the HIT will cost families about $5,000 in higher premiums over the next decade.
Beyond the increase in health care costs, the HIT could significantly slow our country’s economic growth as well. The latest U.S. Chamber Small Business Outlook Survey found that 71 percent of small business owners thought the healthcare law made hiring people more difficult. Conversations during last week’s U.S. Chamber Small Business Summit reinforced this trend as employers discussed how the uncertainty caused by the HIT is already having a real-world impact on their ability to grow their businesses. The resounding message is clear – hiring new workers and ensuring quality health care coverage is available for existing employees will be increasingly challenging for our country’s small business owners.
These small businesses are not alone in their concerns. Members of the Stop the HIT Coalition, including representatives from the National Association of Health Underwriters, the New York Farm Bureau and the NFIB Research Foundation echoed this sentiment in their testimony today about the challenges small businesses will face under the HIT. With the unemployment rate still stubbornly high, Congress needs to pursue legislation that removes barriers to growth – especially for small businesses.
Without any action to repeal the HIT, the future could be bleak. A recent study by the NFIB Research Foundation found the tax would result in as many as 262,000 fewer private sector jobs and would reduce national economic output by as much $35 billion by 2022. Roughly 59 percent of the jobs lost would be from small businesses.
With all evidence highlighting the negative effects of the HIT on the small business community, it is encouraging to see Congress taking action on this issue. The House hearing comes on the heels of bipartisan legislation introduced by Reps. Charles Boustany (R-La.) and Jim Matheson (D-Utah) to repeal the HIT which currently has more than 140 cosponsors. Senators Orrin Hatch (R-Utah) and John Barrasso (R-Wyo.) have introduced the companion bill in the Senate. Hopefully the testimony heard today, coupled with the continued analysis of the severe effects of the HIT on small business growth, will encourage further action to finally repeal the HIT.
Randel K. Johnson
Senior Vice President
Labor, Immigration, & Employee Benefits
U.S. Chamber of Commerce