Health Care Reform Bill - Business Tax Credit
Posted: June 4, 2010
About 10 weeks ago, I wrote a column questioning whether the new business tax credit provision in the sweeping health care reform bill would do much for small business owners in West Central Wisconsin.
As a short refresher course, small business owners who employ at least 25 people or less, currently provide 50 percent of their employees' health care benefits and pay them an average wage of $40,000 per year, would be eligible to receive 35 percent of the health insurance expense as a tax credit. In my column, I asked if anyone in this area of the country would A) Qualify to apply for the tax credit; and B) Take the time to apply because of the government stipulations.
Since then, I have done more research about the health care reform bill that was passed earlier this year. Three items stood out to me that will make it onerous for the owners of small businesses in this region to bother taking advantage of any tax credit.
1) About 87 percent of the small businesses in this country don't even qualify for the program, according to the National Federation of Small Business (NFIB) - a figure that didn't shock me when I wrote the initial editorial.
2) One of the new taxes is a so-called fee for health insurance. The tax, which will amount to more than $14 billion by 2018, will be charged to insurance companies based on their market share. But let's not kid anyone here: The tax will be paid by the insurance companies' customers, but labor union workers' plans that most big businesses subscribe to will not be affected.
3) A study by the Federal Policy Group published a report last fall that stated the amount of taxes passed on to the typical family of four could be $500 or more per year.
But the line-item in the budget bill that really bothered me the most was the new requirement that forces all businesses to issue IRS-1099 forms to document every business-to-business transaction of $600 or more. The government expects to raise another $17 billion because of the new rule, which is a pittance compared to the $1 trillion taxpayer bill.
Essentially, this can be summed up by saying that more government is going to mean more paperwork for those who want to participate in a program that probably doesn't effect most of the small businesses owners in the Chippewa Valley.