NCPA - National Center for Policy Analysis


August 3, 2009

Last week, the Wall Street Journal noted that the House health care bill places an 8 percent payroll tax on small businesses with payrolls of $400,000 or more that do not provide health insurance for their employees.  In addition, individual workers would have to pay a 2.5-percent tax on gross income if they do not buy the health insurance the government mandates.

According to Devon Herrick, a senior fellow with the National Center for Policy Analysis:

  • What people do not realize is that whether an employer offers health benefits is generally a function of how badly the employees want those benefits and if they are willing to forego wages in return.
  • On average, U.S. firms are spending anywhere from 6 percent, 7 percent and maybe 8 percent of their payroll on health benefits -- but some firms don't offer health coverage simply because the workers may be younger, of moderate income, and just cannot afford to forego 8 percent of their wages for health benefits.

Herrick says labor and health economists both have documented that health benefits are essentially part of an employee's compensation -- employers do not pay for that, workers do.  That is why he contends minimum-wage workers in small businesses will be hit the hardest -- they will either be laid off, or in many cases not get the job because their skills are too marginal to afford the cost of a Cadillac health plan.

Source: Jim Brown, "'Pelosi jobs tax' pairs up with ObamaCare," OneNewsNow, August 3, 2009.

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