Tag Archives: Incentives

News

Did Obamacare really provide a tax cut for small businesses?

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Check out this AP article. (H/T Michele Bachmann)

Excerpt:

When the administration unveiled the small business tax credit earlier this week, officials touted its “broad eligibility” for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage.

[…]Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.

[…]Consider small businesses: “The idea here is to target the credits to a relatively low number of firms, those who are low-wage and really quite small,” said economist Linda Blumberg of the Urban Institute public policy center.

On paper, the credit seems to be available to companies with fewer than 25 workers and average wages of $50,000. But in practice, a complicated formula that combines the two numbers works against companies that have more than 10 workers and $25,000 in average wages, Blumberg said.

“You can get zero even if you are not hitting the max on both pieces,” Blumberg said.

[…]Hoffman, the furniture store owner whose business missed out on the credit, says he understands that lawmakers writing the health care legislation had a limited amount of money to work with. But his company’s premiums rose 15 percent this year, and it’s a struggle to keep paying.

To get the most out of the new federal credit, Hoffman said he’d have to cut his work force to 10 employees and slash their wages.

“That seems like a strange outcome, given we’ve got 10 percent unemployment,” he said.

So, the government is actually paying businesses to NOT HIRE EMPLOYEES and to NOT RAISE SALARIES. That’s the only way small businesses can get the tax credit.

Michele writes:

Unfortunately, this bill will only discourage small businesses from raising wages and/or hiring more employees.  The business owners and employers in Minnesota I’ve met with all have said one thing: the uncertainty of the newly passed Health Care bill is keeping them from hiring and expanding.

Businesses are run by people who put their own skin in the game by risking capital to try to make a profit. That capital is often borrowed from family, friends or banks. And when business owners see that government is passing laws that take away the decision making power of the business owner and give it to government bureaucrats with no skin in the game, business owners get frightened – they are taking all the risks but the government is making the decisions. And government isn’t as good at making decisions for a business to avoid losses as the business owner is.

So even though Obama spends trillions of dollars, bankrupting the next generation of taxpayers, it can still be the case that unemployment increases. He’s killing the economy with his meddling – just the same way as interventionists like Hoover and FDR did during the Great Depression. When business owners see that the rules are changing under them because of state intervention into the economy, they just don’t have the confidence needed to expand their businesses, hire employees, or raise salaries.

And don’t forget that the money for the “tax credit” is being taken from your children, who will eventually have to pay for all of Obama’s spending.

News

The truth about government-run health care in the United States

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Two stories today, the first from the Houston Chronicle, about Medicare. (H/T Stuart Scheiderman)

Excerpt:

Texas doctors are opting out of Medicare at alarming rates, frustrated by reimbursement cuts they say make participation in government-funded care of seniors unaffordable.

Two years after a survey found nearly half of Texas doctors weren’t taking some new Medicare patients, new data shows 100 to 200 a year are now ending all involvement with the program. Before 2007, the number of doctors opting out averaged less than a handful a year.

[…]More than 300 doctors have dropped the program in the last two years, including 50 in the first three months of 2010, according to data compiled by the Houston Chronicle. Texas Medical Association officials, who conducted the 2008 survey, said the numbers far exceeded their assumptions.

[…]The opt-outs follow years of declining Medicare reimbursement that culminated in a looming 21 percent cut in 2010. Congress has voted three times to postpone the cut, which was originally to take effect Jan. 1. It is now set to take effect June 1.

The uncertainty proved too much for Dr. Guy Culpepper, a Dallas-area family practice doctor who says he wrestled with his decision for years before opting out in March. It was, he said, the only way “he could stop getting bullied and take control of his practice.”

“You do Medicare for God and country because you lose money on it,” said Culpepper, a graduate of the University of Texas Medical School at Houston. “The only way to provide cost-effective care is outside the Medicare system, a system without constant paperwork and headaches and inadequate reimbursement.”

What’s wrong with government running health care? If there is no money to be made in health care, then there is no one who invests in it. The government is left to bear the full brunt of the costs, and they pass it on to taxpayers. After helping themselves to piece of the tax revenues, of course. The patients are the least of their concerns – especially the elderly, who no longer pay taxes into the system.

Commentary

Thomas Sowell urges us to reflect on economic trade-offs and incentives

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Thomas Sowell

Article here on Creators.

Excerpt:

With all the laments in the media about skyrocketing unemployment among young people, and especially minority young people, few media pundits even try to connect the dots to explain why unemployment hits some groups much harder than others.

Yet unusually high unemployment rates among young people is not something new or even something peculiar to the United States. Even before the current worldwide recession, unemployment rates were 20 percent or more among workers under 25 years of age in a number of Western European countries.

The young have less experience to offer and are therefore less in demand. Before politicians stepped in, that just meant that younger workers were paid less. But this is not a permanent situation because youth itself is not permanent, and pay rises with experience.

Enter politicians. By mandating a minimum wage that sounds reasonable for most workers, they put a price on inexperienced and unskilled labor that often exceeds what it is worth.

Mandated pay rates, like mandated insurance coverage, impose on buyers and sellers alike things that they would not choose to do otherwise.

Workers of course prefer higher wage rates. But the very fact that the government has to impose those wage rates means that workers were unwilling to risk not having a job by refusing to work for less than the wage rate that has been mandated. Now that choice has been taken out of their hands, with the hidden cost in this case being higher unemployment rates.

The law of unintended consequences – hurting the very people they intended to help, because of their economic ignorance. They priced the youngest and most vulnerable workers out of a job, by mandating a minimum wage that no employer will pay to an inexperienced worker. During a recession, you LOWER minimum wage in order to make sure that those most in need can find a job rather than depend on the government.

When people have jobs, they have confidence to spend more money. Making sure that no policy harms job creation is a primary responsibility of government. Jobs, jobs, jobs. No one (especially Christians) should be dependent on the government for money – because the one who pays the piper calls the tune. And no Christian should dance to the tune of a secular leftist government.

If you are a Christian, but not yet a solid small-government fiscal conservative, then read the WHOLE thing. Christians need to understand that the free market is the best guarantor of our freedom of conscience.

Thomas Sowell is my favorite living economist. Walter Williams is number 2. If you click this link, you can read something from Walter Williams about the economic problems that are created by forcing insurance companies to cover people with pre-existing conditions.

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