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Two years have passed since President Barack Obama signed into law the 2010 health care overhaul — and along with it, one of the law’s largest tax increases, the health insurance tax, which falls largely on America’s small businesses.
The rationale behind the new tax — that the $87 billion that it raises from small businesses to cover the out-of-control costs of the overall bill — is unfair and detrimental to investment and job creation.
The president started the year by telling Congress, “Most new jobs are created in startups and small businesses.” So why is he, two months after that speech and two years after the passage of the health care law, ignoring the stark reality that the HIT threatens small-business job growth to the tune of 250,000 jobs by 2021?
As members of the Stop the HIT Coalition, which represents the nation’s small-business owners, their employees and the self-employed actively working to repeal the HIT, we have witnessed an outcry from small businesses across the country at events, through voice cards sent to Washington, D.C., and during conversations with our members. Time after time the message is clear: This is a tax burden that will make it extremely difficult for small-business owners to invest in business expansion, resulting in less revenue, lower wages and stifled hiring.
This sentiment is consistent with a recent Gallup poll that found 85 percent of small businesses had no plans to hire new employees and that nearly half of those small businesses cited increased health care costs as the reason.
The burden will fall almost entirely on the shoulders of small businesses because it applies only to policies purchased in the fully insured marketplace — where 87 percent of small businesses and the self-employed acquire their coverage.
The consequences of the HIT are alarming. Simply put, this tax is job-killing. The National Federation of Independent Business’ Research Foundation found that private-sector employment would be reduced by up to 250,000 jobs and total U.S. sales cut by up to $30 billion in 2021 because of this tax. A recent study by former CBO Director Douglas Holtz-Eakin shows that, on average, the HIT will cost each family about $500 per year.
As the HIT continues to loom, small-business owners are stepping up the fight for Congressional leaders to bring the HIT repeal up for a vote.
GOP Sens. John Barrasso (Wyo.), Orrin Hatch (Utah) and Olympia Snowe (Maine) have introduced legislation to repeal the HIT, and bipartisan companion legislation in the House by Reps. Charles Boustany (R-La.) and Dan Boren (D-Okla.), has earned the support of more than 12 co-sponsors. With legislation supported in both chambers and by members of both parties, the pressure is on to repeal this job-killing provision of the law.
Small-business growth is the answer to healing our nation’s economic woes. Small businesses are the backbone of our nation, creating jobs for hard-working Americans and contributing to the national and local economies. If Congress and the administration are serious about spurring small-business job growth, they will pass legislation repealing the HIT and the president will sign it into law.