The Glove Fits
Posted on March 31, 2010So, according to various news reports, House Energy and Commerce Chairman Henry Waxman is going to “investigate” corporate America for reacting to the President’s new health care law by promising to take huge tax write-downs because of the expected negative impact of the law on their bottom lines.
This kind of reminds me of when O.J. Simpson decided to launch an “investigation” into who killed his wife.
Who killed the jobs, Mr. Waxman?
You did. And no matter how you try to shift the blame, you can’t escape that truth.
According to the Daily Caller, “Rep. Henry Waxman demanded that AT&T, Verizon, Caterpillar, and Deere & Co. justify their claims about the “costs the companies plan to book related to the new health-care law.” According to Business Week, “Dallas-based AT&T said in a regulatory filing yesterday it would record $1 billion of costs, the most of any U.S. company so far. AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees. Under the new bill, AT&T will no longer be able to deduct that subsidy.”
Republicans on the House Ways and Means Committee put out a couple of fun facts about the terrible impact of this legislation on job creation.
For example, leading corporations are already preparing for the big hit they are going to take to their bottom line from this bill. 3M will face $90 million, AT&T will face a billion, Caterpillar will face $100 billion, Medtronics will face up to $200 million, and Prudential will face $100 million. Those are dollars that won’t go into creating jobs.
The health care bill will also do nothing to help small business owners deal with increasing health care costs. In fact, the Congressional Budget Office (CBO) says that those costs will continue to increase. Worse, the provision that is meant to help really small businesses deal with increased health care costs with a small business tax credit doesn’t work for firms with 25 employees. And those are the businesses that probably can afford to hire workers.
This health care tax credit gives a perverse incentive to keep wages low. If the average salary for an employee is $25,000, they qualify for the credit. But if the average salary exceeds $50,000, they don’t. The non-partisan CBO estimated that 88 percent of those who work in the small-group market (insurance sold to small businesses with 50 or fewer employees) will be employed by firms that will not receive any tax credits under the Democrats’ legislation.
According to the National Federation of Independent Business (NFIB), “The businesses most likely to see the tax increase are those that employ between 20 to 200 workers. These businesses account for more than one-quarter of the American workforce.”
The bill also encourages growing small businesses to hire only part-time workers. Under the Democrats’ employer mandate, which includes new taxes based on the number of full-time equivalent employees, only businesses with more than 50 employees are subject to the new taxes. However, part-time employees offer a way to avoid exceeding this threshold. For example, a growing small business could add several part-time employees and as long their total hours do not exceed 120 per month these part-time employees do not count towards the 50 employee threshold.
Does this sound like a plan to kill jobs to you?
It was Johnny Cochrane who said that if the glove doesn’t fit, you must acquit.
But what if the glove does fit?