Like most politicians during these difficult economic times, President Obama is always all about creating jobs. Also, like most politicians in DC, his policies make it clear he has no idea where they really come from. The latest proof of this observation is the forthcoming Health Insurance Tax (HIT), another prize in the Cracker Jack box known as the Patient Protection and Affordable Care Act (PPACA).
The HIT is a tax on insurance companies, but specifically focused on the policies that are purchased by nearly all small businesses and self- employed individuals. The tax would raise a total of $87 billion in the first ten years and $208 billion in the following ten years. This is revenue that will be siphoned from local business owners. It will increase costs, discourage the creation of new jobs and create a crisis of confidence that leaves small business owners too uncertain about the future to grow.
The NFIB Research Foundation’s BSIM (Business Size Impact Module) predicts the rise in cost of employer-sponsored insurance stemming from the HIT will result in a reduction in private sector employment of 146,000 to 262,000 jobs by 2022, with 59 percent of the job losses coming from small businesses. This will amount to a reduction of U.S. real output (sales) by between $19 billion to $35 billion during the same time frame. A similar study released in 2011 predicted a loss of 125,000 to 249,000 jobs and $18 to $30 billion in sales by 2021.
The full report makes it clear that singling out small business for tax increases when unemployment is still a major problem is short-sighted and wrong for our nation’s economy. Bipartisan legislation to repeal the HIT was introduced last month in the House of Representatives by Reps. Charles Boustany (R-La.) and Jim Matheson (D-Utah). Let’s hope the DC crowd figures this out before more jobs go down the drain.