The HIT was originally pitched as a tax on large insurance companies. The hidden caveat is that the new tax only applies to the fully insured market, where nearly all small business and the self-employed purchase their insurance policies.
From our state's beginning, Utah has been known for its industrious nature. From its earliest settlers who drew inspiration from the industrious nature of worker bees — labeling us the Beehive State — to our modern day small businesses that are on the front lines of creating new jobs.
Our small businesses continue to push ahead through these hard economic times, creating jobs and contributing to Utah's economy. This has allowed the state to make it through a number of economic storms.
At the same time, however, small business owners are now facing another huge threat to their well-being and are facing the fact that they will have to reduce hiring and scale back investments in anticipation of the huge costs being handed down as a result of the actions of Washington. Last year, Congress passed a Health Insurance Tax (HIT) to collect even more hard earned money from small businesses to cover skyrocketing bills and out-of-control spending.
The HIT was originally pitched as a tax on large insurance companies. The hidden caveat is that the new tax only applies to the fully insured market, where nearly all small business and the self-employed purchase their insurance policies. The HIT's massive price tag is an astonishing $87 billion in the first decade alone. The new tax is set to take effect in 2014 and will cost small businesses and the self-employed nationwide $208 billion in the next 10 years. Small business employees will also suffer with an estimated $500 dollar reduction in their take-home pay every year, adding up to $5,000 in the first 10 years.
The bottom line is that the HIT is a job killing, cost increasing measure from Washington. Especially during our time of high national unemployment, Washington should be taking steps to protect our nation's No. 1 employer of private sector jobs from additional costs and fees, not adding more burdens. Although this new tax has already been passed into law, some lawmakers, including Utah Sen. Orrin Hatch, are working to prevent further damage.
Hatch is acting responsibly because he recognizes the irrationality of imposing these outrageous fees on Utah's 241,692 small businesses. He recently stepped up to help introduce bipartisan legislation in the Senate that would repeal the HIT and took to the Senate floor to urge his colleagues to repeal the HIT.
When introducing the legislation, Hatch made clear that "eliminating the HIT could help change our economic landscape and provide fertile ground for new business and job growth. It's the type of initiative the American people have been calling for."
In Utah alone, small businesses account for 96.9 percent of the state's total employers, and if this tax is not repealed, they will be forced to freeze hiring to shoulder the HIT's enormous cost. Nationally, nearly 250,000 jobs are at stake by 2021 due to the HIT, and national output is also expected to decrease between $22 to $36 billion if the tax is not repealed.
The small business sector has the potential to pull the country out from this flailing economy and boost the ever-discouraging unemployment rate. Hatch's legislation is an important step in repealing the HIT and protecting the future of not only Utah's small businesses, but also small businesses nationwide.
The longer Congress waits, the more uncertainty small businesses have about the future and the less likely it is that new workers will be hired or operations will be expanded. Our elected officials should follow the lead of Hatch and aggressively get behind this legislation and protect Utah's small-business community. Our small businesses depend on them leading the way in stopping the HIT.
Candace Daly is the state director for the Utah National Federation of Independent Business.