Small Business Faces Big Bite on Healthcare

Headline in Wednesday, July 15, 2009 Wall Street Journal:

“$1.04 Trillion House Health Bill Hits All but Tiniest Firms for Not Providing Insurance”

As we stated in last weeks blog, we are not about political parties. We are Capitalists. Fiscal responsibility and competition are the major underpinning of capitalism.

The July 15 article in The Journal written by Janet Adamy and Laura Meckler offered further proof that the current administration is leading us into the abyss. In a previous blog, we noted the overwhelming size of the deficit being created by the federal stimulus plan. Now, you can add to that number the pending cost imposed by proposed new health-care legislation.

According to the WSJ, Senate Finance Committee, Chairman Max Baucus is trying to prepare a tax package that will cover the projected $300 billion (with a “B”) shortfall over the next 10 years.

Of course, the answer is “tax the rich”. Unfortunately, it is economic suicide to take money away from the people. People reinvest money into the financial system. This money enters the system through direct investment or through bank loans. The banks’ ability to lend depends on their available deposits. Economists tell us that direct public investment is very close to 1:1. That is to say, for every dollar put into service the consumer gets $1 in value. Economists also tell us that funds that pass through the government and then to the public are closer to 1:.50 (or less).

These investments will convert to net revenues that become taxable income. So, it seems to me that taxing $1 will create more tax revenue than taxing $ .50.

The House version of the health-care bill would require insurance companies to accept anyone. The Bill also requires individuals to carry health-care insurance or pay a penalty of 2.5% of their gross income! Is this even constitutional? If a family earns less than $88,000 annually, the government will offer a subsidy to buy the insurance or they pay a penalty. This CPA can’t wait to see how the IRS gets that on a 1040.

I do not know about other states, but in the State of Texas, anyone can get medical care regardless of ability to pay. Yes, you will have to go to a clinic and wait your turn. And yes, you won’t be in the newest hospital in town; but you can still get quality health care. It is called Medicaid and it is Federal funds administered through the State. We actually have employees that option out of our firm’s coverage because the State plan is better and cheaper!

Why in the world do we need to create a $300 billion shortfall to build something that already exists?

--Steve Cook