Small Business Owners Want the Law Repealed – Not Changed

WASHINGTON, D.C. – Today, U.S. Senator John Barrasso (R-Wyo.) released the following statement regarding the Obama Administration’s updated small business tax credit for the Presidents’ health care law.   This new provision is included in President Obama’s FY 2013 budget request. 

“Democrats promised that more than 4 million small businesses would benefit greatly from the previous tax credit included in the health care law. Two years later, the Obama Administration hasn’t even reached six percent of their goal.  Tinkering with tax credits won’t make it any easier for America’s small business owners to deal with the President’s health care law. 

“The truth is that the entire law is bureaucratic, complicated and harming America’s job creators.  Until we repeal and replace the law, small business owners will continue to say that this law makes it harder and more expensive for them to grow and hire new workers.  A recent Gallup poll found that 48% of small businesses aren’t hiring because of the potential costs of insurance under the health care law.”

POLICY BACKGROUND:

The White House released a “fact sheet” this morning on a Treasury budget proposal that attempts to expand and simplify Obamacare’s small business tax credit.  The proposal comes after a recent report from the Treasury’s Inspector General finding only 228,000 taxpayers claimed the credit as of May 2011 – far less than the 4 million some outside groups were claiming could receive the credit.

Implementation Failure

The IRS spent nearly $1 million in taxpayer funds to pay for 4 million postcards promoting the tax credit.  The mailings did not help.  The credit, like the President’s health care law itself, is bureaucratic and poorly constructed.  Republicans pointed that out more than a year ago that this credit was too complex to be of much assistance to small businesses.  Independent experts agree – the non-partisan Congressional Budget Office said before the law passed that only 12 percent of individuals with small business coverage would actually benefit from the credit.  The Treasury Inspector General reported that “there are multiple steps to calculate the Credit, and seven worksheets must be completed in association with claiming the Credit.”

Costs on Small Businesses

The President’s health care law’s small business tax credit is having a nonexistent effect on most small businesses.  The law is actually imposing new costs and burdensome regulations on businesses. 

This week a Gallup survey found 48% of small businesses are not hiring because of the potential cost of health care, and 46% are not hiring because of concerns over government regulations – and both of these problems are due in large part to Obamacare. 

The law imposes nearly $800 billion in higher taxes and dozens of new insurance mandates, each of which could raise premium costs by 1-3 percent.  An article in the New York Times highlighted the skyrocketing premium increases faced by small businesses, profiling small firms hit with premium increases of 20, 40, even 60 percent or more.

Another Failed Promise

The Administration is belatedly admitting that one part of the President’s health care law is bureaucratic, complicated, and harming small businesses.  It would be much better for the Administration to admit that the entire law is, as one analyst put it, “arguably the biggest impediment to hiring, particularly hiring of less skilled workers.”

###