This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
There is no denying that the rising cost of health care is an immense challenge for Utah's small businesses, our state's economy and working families. Rising costs consistently rank as a top concern for small business owners, slowing down job creation and wage growth. It doesn't help anyone when Congress adds on taxes to health insurances policies purchased by small businesses and the self-employed, taxes that are then passed onto the consumer. Specifically, I speak of the Health Insurance Tax (HIT), which since 2014 has taken billions out of the pockets of small businesses across the country.
Despite passing this erroneous tax as part of Obamacare, Congress still has time to right the ship by permanently repealing the HIT tax. Members of Congress on both sides of the political aisle have recognized the harm the HIT tax is doing to small businesses, both in Utah and across the United States, and have called for its elimination.
Sen. Orrin Hatch is one of those in Congress working to eliminate this anti-business, anti-growth levy. Hatch recently met with small business owners in Salt Lake City to hear about how this tax is negatively impacting their livelihoods. He has coauthored S. 183, a bill that could spell a permanent end to this unfair and harmful tax.
The relief this bill would bring small businesses cannot come soon enough. The HIT is a huge barrier making it harder — not easier — to afford health insurance. In 2015 alone, the HIT drained $11 billion from our nation's job creators and it will cost us even more this year. Moreover, the tax is structured to increase annually — meaning that the HIT will come back with even greater force in 2018 unless Congress acts.
The HIT's effects on Utah are especially destructive. The tax strikes at the heart of Main Street—the 250,000 small, local businesses that comprise over 96 percent of our state's employers. Unless the HIT is repealed, businesses like mine will pay at least an extra $500 per employee over the next decade. To afford tens or even hundreds of thousands of dollars in added health care costs, small companies will have no choice but to cut spending elsewhere. The effects of this will ripple through the economy.
As employers, we must remain competitive in our marketplace. In my case, this tax is literally a $24,500 "HIT" to my bottom-line each year, on top of an already heavy tax burden. To remain competitive, I provide my employees and their families with the benefits that talented employees are looking for, including healthcare. Sadly, it is common for me to see these health care costs rise by as much as 15 percent each year — cost increases which are directly tied to taxes like the HIT.
My experience is not uncommon. Many small businesses say that the HIT is forcing them to avoid hiring new employees, delay wage increases, lay off workers, reduce benefits packages, and halt planned business investments. All told, the HIT will siphon $130 billion from the national economy over 10 years and could cost the U.S. more than 200,000 jobs.
The greatest price, however, will be placed on hard-working families, already struggling to get by. As companies become unable to absorb higher healthcare premiums, they have no choice but to pass on a greater share of the cost to employees. More than half the total funds collected from the HIT will come from families making less than $50,000 per year.
For the sake of America's small businesses, our economy, and our communities, Congress should come together to eliminate the HIT tax once and for all.
Ingolf de Jong is president of GENCOMM and chair of the Salt Lake Chamber's Small Business Task Force.