Health Care taxes – Punishing success

Posted by Jason | Posted in Economics, Government, Health Care | Posted on 09-11-2009

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As usual, our government finds it wise to punish good behavior. If you are a small growing business, you better not hire anyone once payroll reaches $499,999. Once you cross over that line, you are in the cross hairs of government regulators who decide how you must treat your employees. If you don’t do what they say, you will pay more taxes.

The House bill mandates that employers with payrolls above $500,000 must contribute — for each full-time employee — 72.5% of the premium cost for single coverage and 65% of the premium cost for family coverage. The penalty for failing to do so is a 2%-to-6% tax on employers with payrolls between $500,000 and $750,000 and an 8% tax for employers with payrolls above $750,000.

via Small Business Crunches Numbers – WSJ.com.

So how does this promote job growth? Business aren’t in the business of charity. If they must spend more on health care or even worse send money to Washington, they are not going to have that money to grow and to create jobs. Those employees will get less pay, because businesses figure out the overall cost of employees. If they budget X for a certain position, the person will get X minus health care, minus taxes, minus social security, minus unemployment insurance, minus workers comp, minus other benefits, and minus any other business cost associated with that employee.

If an employee takes care of themselves and their employer didn’t pay for their health insurance, they would have more money in their pocket. The employer would be able to pay more for the position without the extra costs.  Shopping for themselves, the employee would get better rates and maybe buy a low premium, high deductible insurance plan. This would increase their income substantially. Because businesses are forced into buying health insurance for all regardless to health conditions of each individual, their plans are more expensive and eats more money out of the healthy worker’s pocket. This lowers the standard of living for all workers, and is more punishment for doing the right things.

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