The Obamacare tax credit intended to entice businesses to provide health care costs more than its worth, the nation’s small business owners testified to Congress on Wednesday.
On the sixth anniversary of Pres. Obama's signature health care law, Holly Wade, director of Research and Policy Analysis for the National Federation of Independent Businesses (NFIB) appeared before the House Subcommittee on Economic Growth, Tax and Capital Access to explain the failure of Obamacare’s tax credit incentive.
Wade explained that, instead of increasing, the percentage of small businesses offering health care has actually plummeted, from 43% to 32% since 2008.
A major reason for the drop, Wade said, is that tax preparers are telling small business owners that the time and paperwork required to get the credit costs more than tax savings:
“The tax credit is exceedingly complicated to verify eligibility and claim the credit. The IRS estimates that recordkeeping requirements to claim the credit average just under 11 hours for most filers. The education component is estimated to take about 1½ hours. And finally the time spent preparing and filing is estimated to take an average of 2 hours and 46 minutes. While most small employers use a tax preparer for their business, the costs associated with claiming the tax credit will deter many from going through the process in the first place.
“Since 2010, NFIB has received numerous complaints from small business owners regarding the complexity of the tax credit. Some owners called to say that even their tax preparer told them the credit was not worth the extra costs associated with determining eligibility and filling out the paperwork.”
What’s more, the Obamacare tax credit’s “design is exceedingly restrictive, complicated, and only offers limited and temporary relief,” Wade told the House subcommittee.
Small business owners rank the high cost of health insurance as their “most severe problem,” and that cost is causing them to stop offering health insurance, Wade explained:
“The rising cost of health insurance has forced many small employers to rethink the viability of offering health insurance to their employees.”
“Small business owners rank the cost of health insurance as their most severe problem in operating their business out of 75 potential issues, with 56 percent of small business owners finding it a “critical” problem.”
“The tax credit has now been available to qualifying small employers for 5 years and still, very few businesses have benefited. But more importantly, health insurance costs continue to increase, and small business owners continue to struggle with their ability to afford offering the benefit.”