Say Anything Blog

And a tax on small businesses means a tax on workers.  Because businesses don’t pay payroll taxes.  They pass that tax on to workers in the form of lower wages and fewer benefits.

Even many Democrats are revolting against Speaker Nancy Pelosi’s 5.4% income surtax to finance ObamaCare, but another tax in her House bill isn’t getting enough attention. To wit, the up to 10-percentage point payroll tax increase on workers and businesses that don’t provide health insurance. This should put to rest the illusion that no one making less than $250,000 in income will pay higher taxes.

To understand why, consider how the Pelosi jobs tax works. Under the House bill, firms with employee payroll of above $250,000 without a company health plan would pay a tax starting at 2% of wages per employee. That rate would quickly rise to 8% on firms with total payroll of $400,000 or more. A tax credit would help very small businesses adjust to the new costs, but even a firm with a handful of workers is likely to be subject to this payroll levy. As we went to press, Blue Dogs were taking credit for pushing those payroll amounts up to $500,000 and $750,0000, but those are still small employers.

So who bears the burden of this tax? The economic research is close to unanimous that a payroll tax is a tax on labor and is thus shouldered mostly if not entirely by workers. Employers merely collect the tax and then pass along its costs in lower wages or benefits. This is the view of the Democratic-controlled Congressional Budget Office, which advised on July 13: “If employers who did not offer health insurance were required to pay a fee, employee’s wages and other forms of compensation would generally decline by the amount of that fee from what they otherwise would have been.”

Remember, this isn’t going to hit the much-hated (by populists and liberals) big-businesses like Wal-Mart and such.  This is going to hit the smaller, regional businesses.  The sort everyone, liberals and conservatives alike, claim to want to protect and promote (though I don’t see why one size of business is any important than another, but I digress).

It’s probably surprising to most liberals to learn that the very policies they support - things such as the minimum wage and insurance mandates - actually make it harder for smaller businesses to survive.  Big businesses actually benefit from such policies, in fact, because while they’re big enough to absorb the additional overhead and compliance costs associated with such policies many small businesses aren’t.

That means less competition.

At some point the people of this country are going to have to wake up and realize that the only way to “fix” health care is to quit pretending like we can have someone else pay for us to get all the other care we want.  As long as there is a third-party payer system, either through the government or through employers, health care costs and insurance costs will continue to be a problem because there won’t be any reason for people to conserve their health care consumption.

Unless the insurance companies and/or the government give them a reason.  But who wants that?