May is Small Business Month, a time to recognize the positive impact small businesses have on our society. They don’t just serve our communities;
they also drive the economy by employing half of all private sector employees and
generating 60 to 80 percent of all new net jobs annually.
The private sector needs to be nurtured so it can hire more employees and support economic growth, but small businesses face an increasing number of challenges. Studies show small business owners’ primary concern is the rising cost of health insurance. Instead of enacting policies to ease some of these concerns, the implementation of the Patient Protection and Affordable Care Act (PPACA) is adding to the uncertainty.
The health insurance tax (HIT) included in the PPACA, for example, raises $101.7 billion between 2014 and 2024, and disproportionately affects small businesses. The tax is levied on health insurance companies operating in the fully insured market, and they will pass the costs directly to consumers. With 88 percent of small businesses purchasing coverage from the fully insured market, it will be a devastating rise in cost. What is most interesting about the cost of this tax is that it coincides with Congressional Budget Office(CBO) estimates for repealing the president’s health care plan. The CBO indicated repealing the health care legislation would cost approximately $109 billion over 10 years, making it obvious that small businesses are paying for the legislation.
This is especially troubling because having small businesses shoulder this burden will adversely affect our economy. A recent study found that the HIT would reduce private sector employment by between 146,000 and 262,000 in 2022, and approximately 59 percent of these job losses will fall on small businesses. The onerous tax will also reduce U.S. sales in 2022 by between $19 billion and $35 billion.
The Obama administration has called small businesses the “engine of job growth in our economy,” but they cannot serve this purpose if we continue to increase their operating costs. The small business tax credit is not enough. The HIT will raise more than $100 billion from small businesses, while the tax credit will only save $20 billion over the same period. Not only that, but the tax credit is temporary, while the HIT never ends.
The importance of small businesses to our economy means that repealing the HIT is essential to continued economic growth. As we continue to climb out of the recession, this needs to be a legislative priority for policymakers. Sign our petition now to encourage your member of Congress to cosponsor H.R. 763 and S. 603 and protect the engines of our economy.