NFIB: Healthcare tax credit a big question mark for small business

The numbers just don’t add up

Contact: Bill G. Smith 608/255-6083 or Stephanie Cathcart 202/314-2056

Madison, WI, July 22, 2010 – “We’re from Washington and we’re here to help” never had a more hollow ring or was more factually baseless than in the claims made by some health reform supporters in the number of small businesses that would qualify for the new health insurance tax credit passed under the Patient Protection and Affordable Care Act.

“Supporters claim 4 million small businesses are eligible for the temporary credit, but the fact is less than 2 million small businesses will receive it,” said NFIB tax counsel Bill Rys. “This recently-released research shows how many small businesses will be eligible, but it doesn’t take into account whether the firms even offer health insurance.”

The research referred to by Rys was put out by Families USA and the Small Business Majority. But the small business authority, NFIB, paints an entirely different picture. In Wisconsin, the Small Business Majority/Families USA data claim 81,600 small businesses would benefit from the new tax credit. The NFIB Research Foundation, however, pegs the real number at 29,944, using data from the U.S. Dept. of Health and Human Services, the U.S. Small Business Administration, and the Kaiser Foundation.

“The credit will help some of the smallest, lowest wage paying businesses,” said NFIB’s State Director Bill G. Smith, “but the credit, which is temporary, will have far less impact than the costly new regulatory requirements and expensive tax burdens created by this law.”

“Of the four required criteria to receive a credit, they [SBM/Families] only looked at two pieces (firm size, average wage). They leave out whether the business offers insurance and pays for half (both are required to receive a credit),” Rys continued. “The truth is less than one-third of firms under 25 employees offer insurance. And, the lower the average wage of a firm, the less likely it is to offer insurance.”

These reports fail to mention what states have been doing to increase the cost of health insurance for small business. “Many states, including Wisconsin, continually mandate more and more benefit requirements for health plans, driving up the cost of health insurance for small business owners and their workers,” according to Smith. “Allowing for greater benefit flexibility in small group health plans would do far more to expand coverage than some temporary elusive tax credit out of Washington, D.C.,” said Smith.

[Business owners can see if their enterprises qualify for the healthcare law’s new small business tax credit on health insurance, and if they do, how much it is, by going to http://www.nfib.com/creditcalculator].