There are more than 241,692 small businesses in the state and, in addition to serving as the backbone of local commerce in cities like Sandy, they have served as a bulwark for our community during the economic crisis and helped Utah maintain one of the lowest unemployment rates in the country.
Small businesses play a big role in creating jobs. They account for 96.9 percent of the state's employers and approximately 1.15 million jobs. So common sense would dictate that, now more than ever, policy makers should do everything to help small businesses grow and create incentives to add new ones.
However, for all of the rhetoric we have heard on the importance of the small business community, a tax law threatens the future of hundreds of thousands of small businesses and jobs, and needs to be repealed.
This Health Insurance Tax, or HIT, will strike a blow to small businesses across the United States as it will cost them and their employees $87 billion within the first 10 years alone. Supposedly intended as a tax on large insurance companies to help fund reforms, the reality is this tax will be passed on to small businesses, which purchase the policies on which the tax is levied. Much like the fee a consumer pays at the local ATM or gas pump, small businesses and their employees will have costs taken from their paychecks that will go straight to the federal Treasury.
When the tax goes into effect in 2014, approximately 2 million small businesses will be on the outside looking in. Not only will the tax negatively impact the bottom lines of small business, it will cost their employees with a family plan $500 in the first year and $5,000 in the first decade. Small business owners, already wary of adding new hires, will hesitate to offer pay increases, hire more employees or make purchases or other investments necessary for growth.
Most frightening is the bill has no sunset provision, but goes on forever with yearly indexed increases. The first 10 years will cost small businesses $87 billion; the second decade $208 billion.
A study conducted by the National Federation of Independent Business concluded that the tax will reduce private sector employment by 125,000 to 249,000 jobs in 2021, with 59 percent of those losses falling on small business.
Much to the relief of businesses, legislation recently introduced in the House and Senate to repeal the tax is rapidly gaining momentum. Utah Sen. Orrin Hatch and Sen. John Barrasso of Wyoming have introduced the Jobs and Premium Protection Act, a bipartisan companion to the House bill that has more than 141 cosponsors, including Utah Reps. Rob Bishop, Jason Chaffetz and Jim Matheson.
There is already a bipartisan consensus on the need to support our small businesses. However, if this tax is not repealed, many efforts to boost small business growth will be futile. Repeal the tax now. Our future depends on it.
Stan Parrish is president and CEO of the Greater Sandy Area Chamber of Commerce.