How can I say that? Look at the more than 2,700 car dealerships that are no longer in business. These small business owners woke up one day and out of the blue, lost their entire business. Businesses that had been in families for decades – businesses that supported more than 200,000 Americans – GONE.
Now Obama is looking at new taxes – taxing healthcare. If your employer is paying part of your health care premium, the Obama Administration now wants that to be considered a part of your net pay and therefore taxable income.
What we are missing here is the COST to the small businesses!
Right now every employer matches an employees FICA. The employee pays 7.65% of their pay after deductions, of which one of these is medical premiums. The employer then matches the employees FICA payment with another 7.65%.
Both employer and employee do not pay taxes on Section 125 deductions which include the portion of the health insurance premium the employee pays with pre-tax dollars.
Example:
Mary’s health insurance premium is $500 per month. Her employer pays 50% of this cost. Mary pays the other 50% pre-tax from her paycheck.
Now the entire $500 will be paid by Mary. So the employers FICA on Mary just increased. The employer is now paying 7.65% on $500. BUT so is Mary!
Now Mary has increased income of $6,000 per year. To this amount Mary will have to pay her Federal and State income tax plus the 7.65% FICA – if Mary is at the 21% tax bracket (assuming the additional $6,000 did not put her into a higher tax bracket) she will owe the Federal government an additional $1,260 income tax and $459 for FICA.
The employer will owe $459 FICA for this employee.
If the employer has 20 employees, the increased tax burden is $9,180.
How many employees are going to be happy paying an extra $1,260 to the Federal government plus the $459 FICA, or a total of an additional $1,719?
How many employers can afford the economic hit of $459 or more per employee per month?
I am telling you, the Obama Administration has no respect for the economic engine that small business is in America!
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