I agree that we need to make some serious changes to health care. The real questions I have are how effective will any new legislation be and at what cost? Who’s going to pay and how much? If we borrow the money, how would we pay it back? What will be the impact on small business and job growth in America? After all, small business is the engine of most jobs and the world’s economic progress.
I’ve been watching the developments with health care reform pretty closely. In fact, it’s of so much interest that I set up a Google Alert months ago. By now you probably know that our U.S. House of Representatives narrowly passed HR 3200. And now it’s off to the Senate where it’s highly likely many changes will be negotiated before we see it in it’s final form.
Why am I so interested in this? I am not really a political person in any way. I should be an Independent, but I’ve not made it a priority to make the change. (Every time I ask my wife Janice to do it she tells me to take a hike.) So I remain a Republican. Yet, I vote for the politicians who vote in favor of the issues that I think make sense. Meaning I don’t look at partisanship as much as I do the issues and the impact they would have on me, my business, other small businesses, our children, parents, friends and a few relatives. (Just kidding.)
The point is I am interested in issues not politics. I guess a lot of us would lump them together. But an issue can be looked at. A bill going to the House or Senate can be read, maybe. Politics is noise to me. Mainstream media, speeches, and countless new books. Who’s telling the truth? Where’s the money behind the vote coming from? It’s kind of painful for me to hear the daily noise if you know what I mean. Check out Eddie Murphy’s movie The Distiquished Gentleman if you want a great take on American politics.
I am very interested in this issue, health care reform, and it’s impact on small business because I own a small business. Most of us in the WealthNet community of entrepreneurs are working very hard to grow our businesses, attract and pay new employees and make a difference in the world of small business. And guess what? Every single WealthNet Partners client owns a small business and they’ve got everything on the line every day to make it grow.
I hear a lot of people are too busy to pay attention these days. To read, make a phone call or send an email to an elected official, let alone vote. The simple truth is we make time for what is important to us. Period. Paying attention to this legislation, and perhaps communicating how you feel about health care reform as a small business person, should be a priority if you care about being able to grow your business in the future.
Here’s an overview of HR 3200. It will take some time for our friends in Washington to haggle through this bill.
1. Employers will have the option of providing health insurance coverage for their workers or contributing funds on their behalf. Either way, this is an expense for small businesses. It means your margins will shrink, unless…
Option A. You pass the cost along to your customers.
Option B. You eat it.
Option C. Both A and B. (Or you move your business to what country?)
I guess by writing this I am going on the record so to speak. Higher taxes and increased regulatory burden on small business combined with a dollar in serious, serious trouble, will likely translate to an inflationary future. Whether it’s inflation or stagflation, neither bode well for small businesses, job growth, and economic expansion.
I follow each point regarding the legislation with how I look at things as a small business owner. Selfish? Not entirely. I just want to keep growing small businesses.
2. Employers who choose to contribute will pay an amount based on 8 percent of their payroll. Nice tax. Google “State of California taxes” later and tell me what you see. High taxes and they are bankrupt. IOUs anybody? And that’s where we’re headed economically if we keep raising taxes. The more we pay in tax, the less we have to reinvest in our businesses. The most important investment in any business is people. Which means new jobs. Income. Savings. Spending. Good things happen when small businesses grow.
3. Those employers who choose to offer coverage must meet minimum benefit and contribution requirements spelled out in the proposal. Great. More compliance crap to deal with in the office. So there’s also got to be a new government department, division or something to oversee compliance. Making sure we meet their minimum contributions on the new tax. And where does that money come from to pay for the new bureacracy?
4. Businesses that have payrolls below $250,000 are exempt from the employer responsibility requirement. Now there’s a real bonus for us. Barf. So what incentive does that give small businesses to go over $250,000 in payroll? Are you kidding me? This is payroll folks. And $250,000 in payroll isn’t squat really. It gives us the exact opposite of what we really need. We need incentives. This is a direct disincentive to exceed $250,000 in payroll. Which means small businesses are less likely to hire people. And if they do guess who will pay for the higher cost of goods and services? Yep, inflation rears its ugly head again. And small businesses account for roughly 60% of ALL THE JOBS IN OUR NATION. If we have no job growth then our economy continues to shrink and limp along.
5. A penalty will begin to phase in, starting at 2 percent, for firms with annual payrolls over $250,000 rising to the full 8 percent penalty for firms with annual payrolls above $400,000. Oh good. I love penalties. As much as I like speeding tickets. Come on small business people. Let’s get off our butts right now and start calling, writing, and emailing our elected officials. People all over the world are reading these posts. Most of us are right here in the U.S.A. though. Commit to taking what action you can take.
6. In addition, a new small business tax credit will be available for those firms that want to provide health coverage to their workers. An offset. I don’t really trust “fuzzy math.” Look where we are today economically. Let’s pay careful attention to this formula and what the credit really translates to.
So there it is. A quick overview and my personal commentary on the issues, not politics. Most of us in this community are small business owners. We take the risk and bear the responsibility to start, fund, market, and grow successful businesses. We think and act differently. We take charge. Sometimes we succeed. And quite often we fail. And this is what made America great in the first place. Bold vision. Hard work. Fair tax and government regulation. That’s why our Forefathers got on all those rickety ships, sailed across the Atlantic, and told the King of England and all his men to take a hike. Real entrepreneurs. They were small business people too!
We always welcome your comments here.
P.S. Do you believe history repeats itself in certain ways? I once again refer you to Google, “The Cycle of Democracy” and tell me where you think we are in the current cycle. Do it now and leave a comment here. What do you think?
Written by Cliff Jones on November 16, 2009, 1:49 pm under the following categories:
Internet Marketing,
News.
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