The Wall Street Journal presents a cheery little look at some of the details of Nancy Pelosi’s health care “reform” and what it will mean to the job market as small businesses and individuals fall victim to The Pelosi Tax:
To put this in actual dollars, a worker earning, say, $70,000 a year could lose some $5,600 in take home pay to cover the costs of ObamaCare. And, by the way, this is in addition to the 2.5% tax that the individual worker would have to pay on gross income, if he doesn’t buy the high-priced health insurance that the government will mandate. In sum, that’s a near 10-percentage point tax on wages and salaries on top of the 15% that already hits workers to finance Medicare and Social Security.
Even Democrats are aware that his tax would come out of the wallets of the very workers they pretend to be helping, so they inserted a provision on page 147 of the bill prohibiting firms from cutting salaries to pay the tax. Thus they figure they can decree that wages cannot fall even as costs rise. Of course, all this means is that businesses would lay off some workers, or hire fewer new ones, or pay lower starting salaries or other benefits to the workers they do.
It gets worse from there:
A new study by Sageworks, Inc., a financial consulting firm, runs the numbers on the income statements of actual companies. It looks at three types of firms with at least $5 million in sales: a retailer, a construction company and a small manufacturer. The companies each have total payroll of between $750,000 and $1 million a year. Assuming the firms absorb the cost of the payroll tax, their net profits fall by one-third on average. That is on top of the 45% income tax and surtax that many small business owners would pay as part of the House tax scheme, so the total reduction in some small business profits would climb to nearly 80%. These lower after-tax profits would mean fewer jobs.
With hits like these, many small businesses are simply going to cease to exist. Former workers will be subject to a 100% Pelosi-driven unemployment tax, if you will. If you think the economy is in rough shape now, wait until something like this gets put into place.
Keep in mind that the health care “reforms” will only kick in in several years – but the taxes will start much sooner. This is a sure recipe to kill any economic recovery and guarantee high – and growing – unemployment.
Is that really the change you hoped you were being promised?