Unhealthy War on Small Business

The continues march to government run health care continues-and the implications for small business in this country are profound: "The last thing struggling small businesses need now is yet another employer mandate from the government, but they'll be getting a big one if Congress passes the so-called Affordable Health Choices Act, better known as Obamacare. And the last thing the economy needs is more unemployment, which this budget-busting, jobs-killing bill virtually assures."

As we said last summer: "Yesterday we were given an opportunity by Lou Young of WCBS TV to comment on the president's health care plan; and our position remains, that the plan will severely damage the already reeling small business sector because, as we said, there is no cost containment that will insulate small firms from additional-and expensive-mandates. The current plans simply make matters worse.

With record job losses piling up every month, and with no clear idea on just how the 40 million or more folks who are currently uninsured are going to get covered-and who will be forced to pay for their coverage-it is not the best time for the federal government to be engaged in a complex overhaul of 17% of the American economy. And, as we pointed out to Lou Young, we're currently experiencing record bankruptcies and foreclosures in the NYC small business sector, and any additional burdens-no matter how well intentioned-will further cripple an already hobbled economic sector."

It's just the same thing as the proposed sick leave bill wending its way through the city council in New York. As the NY Post commented last week: "The bill, on which the council heard testimony yesterday, would require employers to provide paid sick leave to employees -- at least five days a year from all businesses, and nine if it employs 10 or more people. That may be nice for workers in the very short term -- but at a time when firms are still struggling just to survive, the last thing they need is steeper operating costs. And as for expansion, well, just forget about it. So let's call this what it is: a jobs tax, pure and simple."

The kinds of mandates that the health care bill are seeking to impose would be just that-a tax on small business and a barrier to any kind of expansion that the economy desperately needs in these high unemployment times. When we started advocating on behalf of small business three decades ago, what impressed us most was the entrepreneurial energy-and yes the job creation that resulted from it.

So it looks as if Joe the Plumber was right-at least about the president's myopia when it comes to understanding the economic principles that are the foundation for all real economic growth. As one small business web site puts it: "We’ve been having a lot of conversations with Small Business owners about how they will change their businesses if Congress passes their monstrous, prosperity-killing Health Care Bill. We are also small business owners and employees ourselves, and what is emerging from these conversations frightens us and should frighten all American workers.The consensus? “They can force us to pay for health care, and fine us if we don’t, but they can’t prevent us from firing workers or lowering wages.” When you change incentives, you change behaviors, and if this bill passes, Small Businesses are incentivized to lay off workers and lower wages."

As is true of the current sick leave legislation-something that shouldn't be done in the middle of a recession. What makes the health care bill's even more dangerous, however, is that there's a tax waiting to be imposed on top of the mandates; along with the fact that insurance premiums will be driven up to pay for both the uninsured as well as those with pre-existing conditions

As the Wall Street Journal points out in regards to the Rangel proposal that was largely incorporated into the current health care legislation: "Every detail isn't known, but late last week Ways and Means Chairman Charlie Rangel disclosed that his draft bill would impose a "surtax" on individuals with adjusted gross income of more than $280,000 a year. This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study. That study also found that almost half of the income taxed at this highest rate is small business income from the more than 500,000 sole proprietorships and subchapter S corporations whose owners pay the individual rate."

So there you have it. Expensive mandates, higher premiums, and the taxes to pay for an expansion of a government entitlement program that will add the the already ridiculously high national debt. How many more workers need to be let go before we begin to realize that we're all speedily heading for economic Hell on the road paved with the good intentions of the economically illiterate.