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Health Care Bill A Concern For Small Businesses
Volume 631
July 30, 2009

The Obama administration’s proposed health care plan currently being debated in Congress is making some American small businesses feel ill. The bill that is in the House of Representatives would penalize small business owners if they do not offer health care to their employees. According to a new survey from the National Federation of Independent Businesses (NFIB), a majority of the organization’s members see this as a far too drastic measure that will negatively impact many business owners.

As the bill currently stands, businesses with payrolls above $400,000 will have to pay an 8% penalty if they do not provide health coverage to employees. Those with payrolls between $250,000 and $400,000 will pay a smaller penalty. Businesses with a payroll under $250,000 will not have to pay anything. Some firms may be eligible for tax credits to fund the coverage. "It’s the dumbest thing I ever heard in my life," says Bert Brander, vice president of Sim & Brander (asi/327000). "That means either you have three choices: not make any money, cheat the government or fire people [to reduce payroll]."

Indeed, some have called the measure a job killer. Noting that it only takes employing four or five employees to exceed the $250,000 threshold, Brander says it might just be cheaper to lay someone off rather than incur healthcare costs for the entire staff. It may also prevent hiring at growing companies,says Brenda Mulberry, president of Pike Products (asi/295681). "I don’t understand the point [of the bill]. It is ridiculous," she says. "It just makes you not want to hire another person."

Another alternative is to just pay the penalty. "It would be cheaper just to pay the penalty. They don’t want to help the employee. They just want your money," says Mulberry.

The NFIB Chief Economist William Dunkelberg agrees. "This is an unfortunate use of small businesses as a tax collector," he says. "They are just using them to collect taxes. They like that because then people yell at the businesses instead of the politicians."

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