• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Side Effects: Obamacare’s Small Business Tax Credits Won't Go The Distance

    Will more small businesses be able to offer their workers health coverage under Obamacare?  The legislation creates a tax credit to encourage just that.  But a new report from The Commonwealth Fund says it probably won’t help much.

    Though small firms eligible for some level of the tax credit employ approximately 16.6 million employees, the report estimates that businesses that might actually take advantage of the credit employ only 3.4 million workers. Moreover, a large portion of those 3.4 million already receive health insurance through their job.

    The Washington Post’s N.C. Aizenman notes:  “those firms that do not offer coverage are unlikely to consider the tax breaks enough of a financial incentive to start doing so.”

    Understanding why isn’t hard.  To qualify for the tax credits, a company must pay for at least 50 percent of their employees’ health insurance premiums. Companies with few employees and low payrolls receive the highest percentage of tax credits. The maximum credit amount is 35 percent of an employer’s contribution to premiums in 2010, and 50 percent starting in 2014.  But the tax credits will stop entirely after 2016.

    A tax credit that dries up in six years provides little incentive for employers to assume massive health costs.. And in a struggling economy, with employers looking to cut costs anywhere they can, the appeal diminishes even more.

    Obamacare advertised small-business tax credits as the solution for employers unable to afford health coverage for their workers. But the meager, short-term tax advantages don’t outweigh the slew of new taxes, mandatory payments and other projected cost increases businesses face from the health care law.

    This blog was co-authored by Charles Adair.

    Posted in Obamacare [slideshow_deploy]

    5 Responses to Side Effects: Obamacare’s Small Business Tax Credits Won't Go The Distance

    1. Billie says:

      Something is happening for some business owners. There have been significant business closings but others are opening, by immigrants? Is everyone under the same rules, regulations, taxes, subsidies, GOVERNMENT? Honest businesses who've followed the rules all throughout many years of ownership and without infringing the government, closes?

      Am I wrong to see favoritism here? Or is this just part of the take-over of the country?

    2. Pingback: The Job Creation and Small Business Relief Act of 2010 | DBKP - Death By 1000 Papercuts - DBKP

    3. Pingback: Impertinent Questions: The Job Creation and Small Business Relief Act of 2010 « Doctor Zero

    4. Pingback: GOP 'Pledge' makes closing argument to voters

    5. Leroy R McTarsney Jr says:

      The very fact that Nancy Pelosi had the absolute gall to say "We have to pass the bill so we can find out what is in it."This ,by it's very nature,is criminal, if not just out right insanity. The people in DC took an oath to defend the Constitution against all enemys foreign and demestic. How can we count on them to do that when the very legislation they try to impose on the American people, violates the very Constitution they swore to defend. It completely boggles my mind.I truly hope that this is brought before the Supreme Court and our Justices repeal this crime against the Constitution and the American people.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.