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Opinion: Hidden health insurance tax on small businesses needs to be suspended

Opinion piece reposted from The Daily Review


Leaders in small towns and rural communities throughout Pennsylvania are always looking for ways to strengthen our economies, improve the quality of life for our constituents, and address the unexpected challenges we are always confronted with.

While the United States economy is inarguably growing, we, in rural Pennsylvania, typically experience economic growth at a slower pace than other areas. Rural small businesses also have far less tolerance for bad government policies and the high price tags these policies always seem to come with. If you’re in touch with rural America, you can’t help but feel the fragility of it all. Despite the momentum created by economic growth, a few setbacks could kill a family farm or shutter a family business that so many have worked so hard for so long to build.

Our policymakers must continue to support our small-business community in every way they can to avoid unnecessary hindrances. Most immediately, business owners are extremely concerned about the climbing costs of health insurance and policies like the Health Insurance Tax (HIT) set to take effect in January 2020 which will only make insurance premiums more expensive. Congress needs to suspend this tax for next year and pass the Health Insurance Tax Relief Act of 2019 (H.R. 1398/S. 172). Doing so ensures the continued prosperity of our region and the rest of the country.

The HIT was one of the single largest tax increases enacted as a result of the Affordable Care Act in 2010. Over the next decade, it is estimated that this unnecessary tax will cost $260 billion. Fortunately, Congress has come together in the past and provided delays — and it can easily do so again.

The HIT is a hidden tax on Main Street. While it is technically placed on health insurers, small-business owners who cover their employees through the fully insured marketplace end up paying much of the cost in the form of higher premiums. Those premiums have been on the rise, anyway, even despite the past suspensions of the HIT; in fact, 95 percent of small businesses have seen their premiums increase in recent years.

This puts entrepreneurs in a corner. They value their employees, often like family, but they will have to make difficult choices. Ask employees to share more of the cost, perhaps, or cease coverage altogether; freeze new hiring or even cut existing jobs. That starts a domino effect, and an entire business can suffer if owners can’t retain the hardworking and talented staff they need for success. Unsurprisingly, the HIT could reduce the U.S. workforce by as many as 286,000 jobs through 2029.

And make no mistake, this is also a tax on the middle and working classes. More than half of the entire tax is absorbed by those earning between $10,000 and $50,000 a year. An eyepopping 142 million Americans will pay higher insurance premiums in 2020 as the result of the HIT.

Our federal legislators need to bear in mind that small businesses are the backbone of our economy, here in Bradford County and across the country. They already pay local, state, and federal taxes; at some point, it is simply too much to account for when so many businesses operate on razor-thin margins. They have often made tremendous sacrifices, investing their life savings and devoting their best years to succeeding. They employ our residents and build our communities — and they deserve our support.

Let’s help them keep thriving. Pennsylvania’s U.S. Senators Pat Toomey and Bob Casey need to make delaying the Health Insurance Tax a top priority before the end of the year, suspending it at least through 2020 and hopefully for years to come, to provide Keystone State small-business owners with the certainty they need to plan for years to come.

Doug McLinko is Chairman of the Board of Commissioners of Bradford County, Pennsylvania.