MYTH 6: Health care reform would tax all small businesses
CLAIM: The House Democrats' bill will raise income taxes on small businesses.
- Wall Street Journal editorial: "The health-care bill is a jobs killer, with its 5.4-percentage point income surtax that would hit small business especially hard." [Wall Street Journal, 8/9/09]
REALITY: Ways and Means committee stated that according to JCT, only 4.1 percent of small-business owners would be affected by surtax. The legislation would establish a 1 percent tax on joint income exceeding $350,000 but not greater than $500,000 per year; a 1.5 percent tax on joint income exceeding $500,000 but not greater than $1 million per year; and a 5.4 percent tax on joint income exceeding $1 million per year. Single filers would be subject to the surtax starting at income exceeding $280,000 per year. The House Ways and Means Committee stated, "Using the broadest definition of a small business owner (i.e., any individual with as little as $1 of small business income), the nonpartisan Joint Committee on Taxation has estimated that only 4.1% of all small business owners would be affected by the health care surcharge."
CLAIM: House Democrats' bill would subject all small businesses to an 8 percent payroll tax as a penalty for not providing insurance to employees.
- GRETCHEN CARLSON: "[T]he real victim, potentially, of this health care reform ... is the small business owner. ... [T]hey are going to be hit potentially with this health care reform if they don't offer health care to their employees -- an 8 percent penalty on them." [Fox & Friends, 7/16/09]
REALITY: Companies with annual payrolls of less than $250,000 would pay no penalty under the House bill. The House bill 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.
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