The House version of health care reform, the Affordable Health Care for America Act (H.R. 3962,) that was passed on November 7, 2009, would probably hurt, not help, small businesses with the challenge of providing medical coverage for staff.
Here's what the bill would do:
- Force small businesses to offer health care for full-time and part-time workers. To offset some of the cost, there is a tax credit for small businesses with 25 or fewer employees, but it would be available only for two years and eligibility for the credit in those two years would be difficult to achieve.
- Impose higher payroll taxes on businesses with payrolls of $500,000 or more that do not offer “qualified” health insurance; these businesses would have to pay an 8% payroll tax.
- Raise income taxes on successful small business owners (a 5.4% surtax on singles with income over $500,000 and joint filers over $1 million). NFIB estimates that more than one-third of owners of small businesses employing 20 to 250 employees could face this surtax.
In effect, the Act would discourage small businesses from hiring new employees, could lead to more layoffs of existing employees, and might even force some owners out of business.
While the House version is a long way from becoming law (the Senate first has to consider its own version and then, if passed, would have to be reconciled with the House version), it is still scary that so many members of Congress don’t get small business—or maybe they just don’t care.