NY Times ignores House health bill's exemption protecting small businesses
SUMMARY: The New York Times reported that House Democrats' health care bill levels "a payroll tax -- as much as 8 percent of wages -- on employers who do not provide health insurance." But the Times did not note the bill's exemption protecting small businesses.
In a "news analysis" that ran on the front page of The New York Times' July 18 edition, reporters Robert Pear and David M. Herszenhorn reported that House Democrats' health care reform bill levels "a payroll tax -- as much as 8 percent of wages -- on employers who do not provide health insurance to workers." However, despite subsequently citing lawmakers' stated concerns about the impact of the bill's tax provisions on small businesses, Pear and Herszenhorn did not explain that the 8 percent payroll tax would only apply to "employer[s] with an annual payroll of more than $400,000," as they themselves noted in a July 14 article. Nor did they note that companies with annual payrolls of less than $250,000 would pay no penalty for failing to provide health insurance for their employees.
As Media Matters for America has noted, the House Democrats' bill, the America's Affordable Health Choices Act, would establish a 2 percent payroll penalty for employers with combined payroll between $250,000 to $300,000 that don't offer health insurance to employees; a 4 percent penalty for employers with $300,000 to $350,000 in payroll; a 6 percent penalty for employers with $350,000 to $400,000 in payroll; and an 8 percent penalty for companies with annual payrolls exceeding $400,000. Additionally, the bill establishes tax credits for small-business employers that do provide health care.
From Pear and Herszenhorn's July 18 New York Times article, titled, "Democrats Grow Wary as Health Bill Advances":
On Capitol Hill, the picture is more complex. Representative Jared Polis, a freshman Democrat from Colorado who voted against the bill approved Friday in the Education and Labor Committee, said he worried that the new taxes "could cost jobs in a recession."
To help finance coverage of the uninsured, the House bill would impose a surtax on high-income people and a payroll tax -- as much as 8 percent of wages -- on employers who do not provide health insurance to workers.
Mr. Polis said these taxes, combined with the scheduled increase in tax rates resulting from the expiration of Bush-era tax cuts, would have a perverse effect. "Some successful family-owned businesses would be taxed at higher rates than multinational corporations," he said.
In a letter to the House speaker, Nancy Pelosi, Mr. Polis and 20 other freshman Democrats said they were "extremely concerned that the proposed method of paying for health care reform will negatively impact small businesses, the backbone of the American economy."
The GOP says raising taxes on the rich, those above $250K will impact small businesses the most and cause massive job restrictions and perhaps layoffs. However, it is indisputable that 95% of tax payers, to include small businesses are in the $250K so received a tax cut and will not be impacted by the hike.
Now here is the twister that is confusing everyone, the census and SBA count folks as a "small business" as anyone who reports as little as $1,000 of business receipts on schedule C. By this definition, both John McCain and President Obama are a "small-business owner," because they show income of more than $1K on Schedule C because of book royalties. However, neither directly employ or pay workers.
When we go with the definition overmars jr explained, it makes the SB number above $250K less than 1%. When you go with the number I explained, it makes the number of SB over $250K around 2%. So the question is how do we as a nation define small businesses and why do we accept such broad use of the term? I think we need to say, small, medium, large and corporation so we are all clear who is being mentioned.
However, the tax credits for SB in the legislation goes by the number of employee's. I personally feel it should be a formula that considers both number of employee's and the owners taxable income. There are SB where the owner employs 200 workers but barely gets by vs a law firm where they may have 10 employees but the owner is making bank. I believe when the owner is making bank like that even though he has 10 employees he should be proving his workers benefits.
Going by the legislation quoted above, the definition appears to be any company with a combined payroll of less than $400k.
I think that this is a reasonable definition rather than going by number of employees or net profits.
The above penalty schedule is reasonable and will encourage employers to find health care plans which will be cheaper than the penalty. I believe that group plans for small businesses are available through the Small Business Associations, and they provide coverage at an affordable rate.
I throw the question back to you: How do you define a small business?
I believe the health exchange should be very beneficial to the small business community. Many can afford to give their workers health care because of cost, the exchange should make it possible to get a competitive rate which I hope means more companies can then participate.
Once again, Media Matters has to do the leg work for the incompetent reporters (NY Times in this case) who are now the norm.