One of the enduring Republican myths is that the “small businessman” wants tax cuts, is being stifled by government intervention and can’t take any more. I’m a small businessman, and I was having a discussion with another one last night, where we both agreed that we’d love some more government intervention, and that we’d both be willing to take a good-sized tax hike to pay for it.
The monkey on our backs isn’t the government, it’s the cost of healthcare. Big corporations can negotiate great rates with insurance companies. Really small businesses, by which I mean less than a dozen employees, have no negotiating power and have to pay whatever the insurance broker can get, which is well over $10,000 per person per year. My friend and I were musing that we’ve put at least $100K a piece into the pockets of insurance companies over the last decade, and I have to say that government has treated me a hell of a lot better than those corporations have during that time period.
Insurance is just part of the problem. Medical expenses are only deductible when they exceed 7.5% of your income, which means that someone making $80K has to ring up $6K in expenses before they can deduct a penny. Flexible spending accounts (FSA), which are standard issue in corporate benefit plans but unavailable to truly small business, allow workers to set aside a few hundred or thousand pre-tax dollars to pay for glasses and co-pays. Both my friend and I have missed out on at least $20K of tax deductions in the past decade, and we’d love a government-sponsored FSA.
There is no bigger problem for small business than healthcare, and I’d love to see government solve it. Even the insurance mandate is a big step forward, because a lot of small businessmen who provide benefits compete with those who don’t, so the mandate will level the playing field.
The only small businesses that Republicans (and, really, Democrats) care about are those whose owners can max out their political contributions. Those of use who have real bills to pay would be happy to take a tax increase to get the insurance companies off our backs.
Fog
“The only small businesses that Republicans (and, really, Democrats) care about are those whose owners can max out their political contributions.”
Bingo. The Republican philosophy is pretty simple. Enrich the donors, scorn the rest.
gnomedad
Bravo!
Pococurante
I’ve had no luck convincing my conservative friends of this truth. But then, I’ve run a business myself and my friends were mostly employees who’ve never had the experience.
I know what it is like to wonder how I’d make payroll next month, wondering who to let go and agonizing when it was a good person but someone who without intent or responsibility impacted the entire company’s ability to operate.
ObamaCare makes us more competitive internally and overseas, it frees up money for businesses to take more risks and higher more people, and it makes for a more stable and moral society.
El Cid
For statistical and analysis purposes (like from NBER or BLS), “small business” includes businesses with up to 499 employees.
I don’t know of too many small business owners who consider their situation to be similar to those with nearly 500 employees.
Not to suggest that they’re GM, though.
I have learned, however, that nearly everyone I’ve ever known to own and operate a small business suddenly becomes as qualified to analyze economics as any high level academics or other researchers. Because that’s what they tell me.
geg6
A good point, which is borne out with my conversations with friends and neighbors who are small business people.
Another point is the series of letters Steve Benen has been posting all week from small businesses. These guys are screwed three ways to Sunday, not just on health care costs but because the huge corporations who they supply are not paying their bills. They spend countless days, energy, and resources trying to get these leviathans, which are making record profits, to pay for goods that their contracts say will be paid for in 30 days (or whatever the deal is). And the leviathans just ignore them, paying months and months later (even years later) and sometimes just not paying at all. They want a bill that says that any company with a government contract or that receives federal funds of any sort must pay its bills to suppliers within 30 days. I can’t see why anyone would object to that. It’s what I have to do, after all.
valdemar
This is staggering to a decadent European like myself. In the UK the media routinely take a pop at the ‘expensive, bureaucratic, uncaring’ (not to mention socialist and immigrant-employing) National Health Service. Yet a small businessman and his employees get exactly the same treatment as anyone else.
It may not always be brilliant, but it’s free at the point of delivery and funded mostly through taxation (there are small charges for prescriptions, dental checks etc). That’s fair, and bollocks to anyone who says otherwise.
Of course, getting hit by a bus is going to be a problem in any society, but there’s only so much interfering those evil socialists can do, I suppose…
John Emerson
My brother employs about 10-20 people and he agrees with this. He’s tried starting an organization on these lines.
A Commenter at Balloon Juice (formerlyThe Grand Panjandrum)
@geg6: You are absolutely correct. I was going to point this out as well. His colleague Jeffrey Leonard wrote an excellent piece on this very subject.
El Cid
Worth its own post (warning: O/T), tens of thousands in Iraq protest and get gunned down to express their joy at having been liberated.
different church-lady
@El Cid: There’s the heart of the matter right there: when we say “small business” we envision the local hardware store with ten employees. When they say “small business” they mean “anything that’s not a fortune 500 company.”
different church-lady
@A Commenter at Balloon Juice (formerlyThe Grand Panjandrum): Are the contracts not set up to punish such behavior? Additional fees if payment dates aren’t met?
This is an established practice in my industry (media), although not everyone takes that option, myself included.
jwb
@different church-lady: But you have to have a lawyer to enforce such provisions, and most small companies can’t afford the cost of the litigation. The big companies know they have the small ones outgunned on the legal front.
phastphil
Republicans believe Koch industries is a small business because only two guys own it.
Of all businesses that should be for a single payer health care system small business would be the logical one (I know logic is asking a lot). Their cry should be: “Pleas get me out out the health care business” and allow me to concentrate on what my business is all about.
Boudica
All my bills state that if I don’t pay by the due date I’ll be charged a late fee. Why can’t these small businesses charge these freeloaders late fees? Put it in the contract…payment due in 30 days or else 10% surcharge.
MarkJ
The problem is how the term “Small Business” is defined as by the SBA/Federal Government. What constitutes a small business is defined either by the number of employees for manufacturing (as noted, anything less than 500 employees is a “small business”) or revenue. For many industries the revenue threshold is pretty high – e.g. any trucking firm with revenue less than $25.5 million is considered a small business, which includes roughly 99 percent of firms in the industry.
When a Republican says something hurts “small businesses” they mean these large firms who have large amounts of extra dough to support political campaigns. They’re small only by the federal definition – they are far from mom-and-pop operations.
WyldPirate
You can substitute any topic regarding money/business the environment, regulation, taxes, etc. where the “middle class and lower gets fucked over and the result is the same–it’s ignored because the people that “matter” are not affected by the policies in any sort of meaningful way. They’ve “got theirs” so fuck the proles. And this is why just about every word written on every liberal/Democratic blog is a waste.
There is a reason for this, too. Americans are generally just stupid fucks. There was a survey that came out yesterday in which barely 50% of those surveyed thought the Health Care reform bill was still in effect. A full 1/4 thought that it had been repealed. Point being is that most Americans are ignorant or stupid and are proud of the fact that they are. The do not and will not understand anything as a majority capable of affecting meaningful economic change until massive economic pain and discomfort is felt. We have not come close to that point yet.
It’s as John Cole said in a post down below—the game is rigged. The players on both sides are bought off. It’s over. The money boys won a long time ago, but they’ve “allowed” a middle class to exist until now. They are not going to stop until they crush about 60-70% of the US population into serfdom.
The ballot box isn’t going to stop the slide, either. The gridlock is going to get more intense in 2012 as the Dems are going to get crushed in the Senate and Obama will be neutered in his second term even if he wins.
The only thing that will reverse the course we are on as a nation is a more precipitous decline in living standards to the point that it motivates those who are oppressed to ratchet it up to the point of violence that leads to blood blood in the streets. This is the rule, rather than the exception from past examples of history as to how these sorts of issues are resolved.
phastphil
Republicans believe Koch industries is a small business because only two guys own it.
Of all businesses that should be for a single payer health care system small business would be the logical one (I know logic is asking a lot). Their cry should be: “Please get me out out the health care business” and allow me to concentrate on what my business is all about.
jwb
@Boudica: And they don’t pay it, then what? You sue? Well, that calls for money to hire the lawyer and so forth, and big companies can lawyer up much more than the small firm can ever hope to, so the chances of winning a good settlement go down. Plus, in suing the big company, you’ve alienated one of your customers, perhaps one of your biggest customers.
Wayne
Absolutely correct. My small business 3-5 persons has always had a problem getting, and keeping, health insurance. And look out if you have pre-existing conditions. If I had gotten sick over the years I would not have been able to get health insurance. Every plan I have ever been in keeps raising rates to push everyone out to a new plan. If you get sick you become a lingering part of a dwindling pool of the insurance plan you selected. They keep raising the rates to push the un-sick out, leaving the rest with little or no options except to write a huge check.
Captain Haddock
@Boudica: In my case a late paying client is better than a lost client. Most do pay on time, but the ones I have that don’t are very big accounts that I’d be sad to see go.
BGK
The company for which I work, about 150 employees, has a workload for about 1.5 employees just managing our health plan. Everyone, including the executives, gets the same plan, so to their credit they’re not cut benefits and our contribution has gone up less than 10% in 3 years. However, keeping this lid on is full-time work, as is beating up Blue Cross when they deny us the benefits for which we’ve paid. The plan “wrangler” is effectively a fascist, but she goes quiet on criticism of single payer. I think she’d love to have it out of her hair.
ppcli
@geg6: Yes. The narrative is in place, and nothing will dislodge it. Around ten years ago, big news in Michigan was that the Holland, Mich. Lifesavers factory was closing and moving out of the country. 600 workers – a huge hit for a city the size of Holland. City and State offered *enormous* tax breaks, municipal electric authority offered cut-rate electricity. No dice – they were going. Stories start up about greedy unions getting what they deserve, cheaper labour overseas, blah blah. Then it turns out they were moving to Montréal, where taxes are much higher, where labour laws are far more labour-friendly and safety regulations far tighter. (Not to mention the language legislation – oh no! More burdensome regulations.)
Why the move? a) Health costs covered by the government, removing a huge cost from the spreadsheet, reducing total labour costs. b) Sugar prices far lower because of the absence of the tariffs the US government puts in place to keep the price of foreign sugar artificially high. A present to the US sugar manufacturers. (Also, though the news stories didn’t mention this, the absence of a Cuba embargo probably also contributes to the lower cost of sugar in Canada.) Those two factors dwarfed everything else.
I kept waiting for the David Brooks column about this, but it never appeared. I wonder why?
gene108
Selling insurance across state lines will instantly cut insurance prices by 1974%, but the Democrat Party doesn’t want to do this to protect their union thug friends and their big government paychecks.
Bush, Jr.’s plan of high deductible plans, coupled with an HSA, where individuals pay for the first 1,100 dollars or above of their medical plans, has already reduced medical prices by 1971%.
Free market solutions will solve the problem, if we could only enact them.
Any thing else you have been told is a lie, based on the propaganda of Saul Alinski and Joseph Goebbels.
PopeRatzy
One of the issues we have is that while we have 15 employees not all of our employees are on our Healthcare Plan. Married couples will choose the best plan for their family. Consequently if one spouse works for a large company with a very inclusive and low cost plan the other spouse will opt out of our less comprehensive plan and enroll in the actual better plan of their spouse thus reducing our pool.
We also have another problem, small company with very low turnover. As our employees have aged the costs have sky rocketed. Last year we had 2 of our 9 covered employees turn 60. Which gave us 4 of 9 covered employees over 60. Our cost of coverage increased 35% overall. Which coincidentally just happens to be the tax break that we will be receiving for providing coverage. In the next two years 2 more will turn 60. Someone explain how we can continue to be competitive and show the loyalty to our employees that they have shown us?
agrippa
It should be pretty obvious that the GOP has no interest whatever in small business. Small business does not have the means to get the GOP to take an interest.
There is little money in small business. They have trouble getting larger corps to pay for services rendered; insurance costs, especially, health care insurance, are onerous.
It is little different from most other matters. So many people simply do not read, research and think things through. If people did that, the GOP would some real issues with getting people to vote for them.
Bill H.
It will get better after 2014, supposedly, when the “health care reform” actually kicks in. I will believe that when I see it, but… I am still an Obama supporter, but to allow the signature piece of legislation to be implemented five years down the road, after he and his party are safely reelected, so that if it doesn’t work as planned it will not affect his hold on power, is craven to say the least.
Meanwhile the problem is not limited to small companies. My insurance is provided by a very, very large company and my cost for health insurance went up 18% at the beginning of 2010 and another 20% on top of that at the beginning of this year, a 41.6% increase in two years. My primary care physician began charging $1,600 annual fee on top of individual fees for services on 12/1/2010, and insurance doesn’t cover that. Both my cardiologist and pulmonagolist have suspended annual visits, so my cardiac arrythmias and my emphysems are no longer being monitored. Happily, my neurologist is still seeing me every eight months to monitor my Parkinson’s Disease.
Six months ago I needed some minor dental surgery, but the periodontist was not willing to proceed without a blood test which, for some reason, he could not order. None of the doctors I am seeing thought the expense of the blood test was justified, so I never had the surgery.
Needless to say, I am not a big fan of the “health care reform” bill.
agrippa
@gene108:
gene:
paranoia will destroy ya.
http://www.amazon.com/Paranoid-Style-American-Politics-Vintage/dp/0307388441
PeakVT
I vaguely remember reading that the majority of “small” businesses filing returns are shells like Koch Industries. Does anyone know more about that?
The Moar You Know
No shit. You and your friend have each put more than $100k into health insurer’s pockets during the last decade? Holy fucking Christ on a stick, I put that much into our insurer’s pockets last year.
It’s my biggest non-salary expense, and we made the mistake of buying our own building…but our mortgage isn’t as much as our health insurance was last year.
They’re trying to
killenslave us all. Don’t know why they want the US to end up looking like Haiti, but they do.gnomedad
@gene108:
So they’d PAY me 20x what I’m paying now to take the insurance? Sweet!
The Moar You Know
@PeakVT: What you’re thinking of is that the definition of a small business got changed. It is now any business that qualifies as an “S-Corp”, which means that it has shareholders but a limited number of them. I forget what the cutoff is, I thought ten, but it may be more. At any rate, any S-Corp is now legally considered a small business, and it doesn’t matter if they have yearly revenues of ten thousand dollars or twenty billion.
jwb
@gene108: You forgot your /wingut tag.
stuckinred
@gene108: you lost jackass or did you think this was a Paul Broun blog?
Erik Vanderhoff
I know what you mean. My wife and her business partner won’t grow their business, despite massive wait lists for their services, because if they do, they’ll have to start providing health care once they have to bring on full-time employees.
Chris
I’ve heard that the original grassroots movement supporting Barry Goldwater was small business owners facing this problem as early as the 1960s.
Since there wasn’t UHC, unions pushed hard to get employers to provide benefits for their workers that would make up for that. Big businesses, as you pointed out, could afford to pay those benefits with no troubles, but small businesses found it very difficult, hence the initial rally behind Goldwater’s anti-unionism. (Understandable frustration, wrong outlet for it).
I wonder how many small businessmen are still there and how many feel the way you do. I suspect far more than we’re usually told are like you.
Rainy Day
Wow, I’m astonished no one here has experienced any positive changes with Health Care Reform. Our small biz (fewer than 10 employees) is saving a tremendous amount of money AND the employees have more things covered with lower deductibles. And, that’s before the tax breaks which can be roughly calculated here:
http://www.smallbusinessmajority.org/tax-credit-calculator/
Just a few months ago, health insurance was our greatest expense. We had an expensive plan because we wanted everything to be covered. Now, we have an equivalent plan for a fraction of the cost PLUS tax breaks. We live in NC and our provider is now Blue Cross/Blue Shield. All of the doctors and hospitals in our area are “in network,” so that’s not an issue, but even ‘out of network’ costs aren’t prohibitive.
Right after we switched insurance companies (cuz our original insurance company decided it wasn’t profitable enough to continue), my mom had cancer cells in her breast, and my hubby needed a routine colonoscopy screening. Everything involved with both of them was covered 100%, using their own doctors and their own hospitals. Our monthly premiums are less than $700/month, including dental (and we’re all over 40). They were almost double that with our previous insurance carrier.
Yes, I’m looking forward to a Public Option, but right now, we are thrilled with the savings and the tax breaks. I am a HUGE fan of ‘health care reform.’
liberty60
Likewise, I am a midlevel manager in a small ($20M) design firm, and our biggest worry isn’t taxes, its actually the loss of customers, caused by the economic collapse;
Even if the GOP cuts our taxes to zero, it wouldn’t benefit us one bit- we need consumer spending to keep the doors open- an extra million dollars in the pocket of the rich doesn’t do squat for us- a million in the pockets of the middle class is what drives the economic engine.
mistermix a.k.a. mastermix
@The Moar You Know: That $100K each figure was for our own personal insurance. Together, our (tiny) companies that pay benefits to workers have paid well over half a million, by far the biggest expense we pay.
PeakVT
@The Moar You Know: Ok, thanks.
ribber
About FSAs: I don’t get why our tax code is structured to treat gambling on your healthcare budget preferentially. If I have $2000 in healthcare costs and put $2000 in a FSA, I pay no income taxes on it. If I put $3000 in a FSA, $1000 goes back to my employer. If I skip the FSA, I pay income tax on the $2000. Why are we rewarding this gamble? Best I can tell, FSAs serve as a gatekeeping encumbrance.
Similarly, $6000 can be deducted for childcare if you have more than one kid. I have 2-year-old twins ($6K is a small fraction of the cost of full-time daycare). But FSAs are structured to have a $5K max. So even if I max the FSA, I still need to do the paperwork on my tax form to get the deduction for the remaining $1K of eligibility. It seems to be just to make things more complicated.
loretta
Medical expenses are only deductible when they exceed 7.5% of your income,
The expenses themselves are subject to this, but if you are a business owner (self-employed, sole proprietorship or LLC or Inc.) you can write off the entire insurance premiums as an expense.
Also, if you join a small business association available in your city or another organization of business owners that is not soley designed to buy insurance, you can get group rates much lower than your individual policies sold by a broker. Besides the fact that the broker does not control the price, the company that sells it does. Don’t blame the brokers. (Disclaimer – I’m a broker.)
Also, too, if you have halfway decent health, you should switch to a Health Savings Account with about $5k or $7k deductible until the new policies are available when the stupid insurance companies finally get around to making them. If you have lousy health, you will not be able to switch companies yet.
You should shop around every six months. If you’re not in a group (which you aren’t) you can change policies any time. It would behoove you to talk to a good agent and other small business owners to see how they are pooling their policies.
Culture of Truth
But I heard on Meet The Press that businesses won’t hire new employees until America eliminates the national debt.
Morbo
A few years ago my (small company employee, 2008-9 change I believe) insurance went from 16$/mo to 44$/mo. In one year. So it was that I jumped on the HSA bandwagon.
jwb
@ribber: Not to mention that the rules on what you can use the FSA for get increasingly complex, and it can be a pain in the ass to track down the correct receipt, which often entails going back to the doctor, since only certain kinds of receipts count, at least according to the firm that manages our accounts. I’ve come to the conclusion that the account takes too much time for me to administer than I receive in benefit for the tax break and am dropping it next year.
Jim Pharo
Wrong Idea: big companies can negotiate lower rates and what small businesses need is more negotiating clout.
The truth is most big companies don’t even bother with insurance — they self-insure, and hire Aetna or someone to administer the claims/payment process. Cheaper to pay the administrative fee than to pay needlessly for risk-sharing. (They already have a large enough pool of risks that there’s no need to piggy-back on an even larger pool.) While the big employer can save some money doing this, it’s not enough to justify smaller buyers banding together.
Here in NYC we’ve had an exchange for a while and all it means is that you can see the various options. For actual coverage, it’s still about $12-14k a year. You can pay less, but you get less coverage. Without a clear definition of what constitutes adequate coverage, we’re forever comparing apples and oranges.
PeakVT
@ribber: Could it be that the savings accounts were designed to be beneficial only to people who have enough education and knowledge to figure out how to use them properly? Nah…
gene108
@gene108: I’m shrill in the morning…too early to be snarky…
gnomedad
@Culture of Truth:
And investigates miscarriages.
Southern Beale
Yeah we’re all supposed to bow down and worship at the feet of the small businessman. Here’s one in the Nashville area, behaving like your modern Randian hero. Taking government contracts and hiring desperate foreign workers and treating them like shit.
Typical.
gbear
mistermix, have you been following Steve Benen’s articles on the damage being done to small business becuase of their mega-corp clients refusing to pay their bills? The letters he’s been printing from small business owners are eye-opening.
Viva BrisVegas
@The Moar You Know:
Because it’s good to be the King.
The King of what don’t matter. If things turn unpleasant there is always the south of France.
What is the libertarian position on the predatory practices of big business on small business? That the small businesses should take their business elsewhere?
mr. whipple
I’m a small(very small) biz owner, too, and could never understand this stuff about oppressive gvt regulation.
PWL
My bro the auto fanatic pointed out something to me some time back: One of the reasons the Chinese will kick our ass is because they DO have national health care.
He said that approx $1500 of every GM car is to cover the cost of health insurance–a cost Chinese auto makers don’t have to bear–which obviously gives them a competitive advantage.
I don’t know why Obama never brought this point up in the brouhaha over health care….this is something even a REPUBLICAN could appreciate…
Sly
@El Cid:
That’s not entirely accurate. The designation of small business can vary between number of employees and average annual receipts, based on the type of business. A logging company, for instance, qualifies as a small business if it has 500 employees or less, but a cattle ranch is defined as a small business if it’s revenue doesn’t exceed $750,000.
In terms of labor statistics, you’re right. But the designation also has implications for the tax code and qualification for Federal programs.
I think the larger point is that Republicans don’t use either definitions for a small business when they make political arguments. For them, anything that’s a subchapter-S or a partnership is a small business, which is both crazy and obscene. Using that definition the Blackstone Group, which employees 1500 people and makes over a billion and a half dollars a year, is a small business simply because it is a limited partnership. Most hedge funds are, because that’s how they get to declare the majority of their income as capital gains under the carried interest rule and only pay 15% on millions of dollars of earnings.
burnspbesq
@agrippa:
They care about small business only to the extent that small business people are willing to be useful idiots.
My law school tax prof, Mike Graetz, co-wrote a great book about the politics of estate tax repeal. He found that the most vociferous support for estate tax repeal came from the National Federation of Independent Business, a small-business lobbying group. Hardly any NFIB member has even the slightest chance of ever accumulating enough wealth to be subject to the estate tax, but they all think they’re going to be the next David Koch. They were quietly conned into walking point by the family-office folks who really did have a dog in the estate-tax fight.
Sly
@PWL:
Chinese companies have to bear that burden through taxation, but the purchasing power of a government-organized health pool makes up for much of the loss. Socialized medicine doesn’t make medicine free, it just makes it a whole lot less expensive.
And Republicans won’t appreciate it because threatening their employees’ medical coverage is one of the major ways management can browbeat labor. To a lesser extent, they like it because offering increased benefits as opposed to wages can help a company offset its payroll tax liability.
Sly
@burnspbesq:
Friends of mine who work in financial planning often tell me about people with less than half a million in net worth who ask them about avoiding the estate tax. It would be funny if it wasn’t so sad.
debbie
@ El Cid:
Re: “Small” meaning 499 or less when it comes to the size of a business.
I didn’t know about this size thing until recently. Why isn’t this being publicized and flogged like the dead robber baron that it is?
Nutella
@Boudica:
And then what happens is Giant Corp customer pays after 90+ days and goes right ahead and subtracts the 10% discount for early payment. And what can you do? Raise prices and continue making interest-free loans to fat cats.
inthewoods
@Jim Pharo: Sounds like we work for the same employee. :)
This post is exactly the argument that I have with healthcare reform – namely that if we want to drive growth and innovation, you have to remove barriers. Healthcare is a major barrier that must stop thousands from starting businesses (I don’t know of any study on this subject) – I know it has made me think twice about starting a business.
Kirk Spencer
@Sly: One of the reasons big business / republicans don’t want universal health care is it cuts competition.
Surveys have shown that a large proportion of employees — not a majority, but still a lot of people — would start their own business if it weren’t for the health care issue. Stay, and keep insurance (even if it’s crappy). On their own, they lose it on top of all the other risks of starting a business.
It also works against employees moving to other businesses and locations. The labor force becomes trapped in much the same way as they were trapped by company stores.
Mike Kay (Peacemaker)
I’ve never understood why business have never supported single payer, if only because it would cut out the expense of the middle man (aetna, et.al.) increasing their precious bottom line.
Mike Kay (Peacemaker)
@Kirk Spencer: Oh, I see.
agrippa
@burnspbesq:
I agree
Parallel 5ths (Jewish Steel)
@burnspbesq: Yes, the aspiring wealthy are the boots on the ground for our modern robber barons.
I’m a small business owner too and have had the same convo as Mr. Mastermix. I also have plenty of artsy friends who would have prefered to work independently or a little more off the grid but just couldn’t because they needed health insurance.
Ruckus
mistermix a.k.a. mastermix
Add another small business owner to your list.
Michael E Sullivan
I own a small business, and as a trade-focused business, 90% of my customers are small businesses also. I am in pretty much complete agreement. I have found a payroll company that will do an FSA at what seems like a reasonable price (if my employees actually use it, putting it in will save me more money on employer FICA contributions than the plan costs).
Generally it is exactly how you say. Health costs have been going up 10% every year. I’ve had to reduce the benefits we offer significantly just to keep costs from going through the roof. We are currently paying more than double what we paid in the early 90s for plans that are significantly worse.
I really laugh when republicans and their shills suggest that cutting the marginal tax rate will cause small businesses to create jobs. That’s a laugh. For starters, most of the small business owners I know don’t have more than 250k taxable income in a year anyway (even the successful ones find ways to expense items etc.). That’s very high total owner’s comp for a 1 million revenue shop, and not terrible for a 2-3million plant.
But for those of us who do — why would having a few extra thousand dollars in my pocket cause me to hire someone? I hire people when I need them to serve my customers. When that isn’t the case, I use any extra money to pay deserved increases and then I save for my own bloody self against the day that the economy or the paperless society puts me out of business (we’re printers).
Or maybe I could, you know, pay all the bills we racked up while not even breaking even in 2009-2010 because unlike most of the rich assholes who run big companies, I didn’t have the heart to layoff people who had worked for me for 10+ years until I absolutely *had* to. I don’t hire people just for kicks because I have the money.
But the biggest reason it makes no difference in my hiring decisions is the simple economic one: income taxes only apply to my *profits*. If I can make profit off of a new worker, I will hire them, even if 5% or 10% or 40% of it will go to the government. Ok, at the margin it’s *possible* that some extra tax on my expected profit would make the difference, but the closer my hiring decision is, the less difference the tax makes.
OTOH, a payroll tax break makes a huge difference, because it actually cuts the cost of employing someone at a given wage (or gives them more money for the same cost to me). Similarly anything that slows the growth of health care costs. It cuts the cost I must pay to offer health insurance, or to compete with those who do if I don’t.
Income tax cuts are fun if you are already making lots of money — WOOO more money! But they aren’t likely to stimulate much job creation outside the personal services for the ultra rich sector.