Whether you believe "Trickle Down" or not, the impact on very small businesses (250K to $2 mil) is much more direct than hitting Microsoft or Coca Cola. Many of the 250-$1 mil businesses are in the services industry - things like landscaping, catering, plumbing, flooring, real estate and the like. If you add a 40-50K tax to those businesses, chances are it will cost a real job. They don't have the expenses to say "Well, we'll just stop having lunches at Ruth's Chris" and make up that 50K. They often run on credit and barely survive as it is. What many would do is layoff one person and reduce their potential workload accordingly - they just don't have many other options.

You are correct. If he is paying $176, I'd wager the employer is picking up the other 75%. That means his bill is most likely $700 a month as benefits a company pays are an extension of your salary.

My point was the cost to actual people given the coverage. Obviously, there's a bigger cost to businesses - but that won't change under Obama. Either business will cover people or (what most smaller businesses will choose) they will pay for the right not to cover people. That expense will be there under either system (only the much larger companies will save under the newer system) - the point is the cost to the actual insured family is fairly low in our current system. And that's the cost that many seem to be referencing in this debate.

A small business owner who is taking home over $500k in income is not living on credit and barely surviving.

As I said, employers are based on value to the company. Take a real simplified approach and say you hired 10 salesman for $40k each. They each bring in $50k in profit through sales and thus each one is worth $10k apiece to the company. If you lost $40k overnight, firing one of your employees would in fact cost you more money as you'd not just be cutting the employer salary, but the value they added to the company.

Most service small business fall in the 250 to 750K range and many are extremely leveraged. They employ 3-5 people (most in hourly situations) and have a high percentage of their money invested in the business. It's not like they write a check for 500K to themselves at the end of each year.
What other choice do they have? Simply stop making phone calls? If you are a 500K business and are asked to cut 10%, that will mean a job for most people. So, in the above situation, that business will simply go from netting 100K to netting 90K and achieve the 50K needed to pay off that new expense.

People act like small businesses have this massive slush fund they can hit every time a new tax comes in. The reality is that tough decisions need to be made when that happens and it usually comes down to:

1. letting go an employee and reducing potential production.
2. Dropping a vendor-provided service (which could be a job impact to that company) and reducing potential production.
3. Selling off certain assets and reducing potential production.

"Pulling cash from the mattress and moving on like nothing happened" is not an option - it's a myth used by politicians who have never owned their own business. If Grey Dog Software got hit with an extra 50K a year (heck, even 25K), there would be MASSIVE changes to our company - and none good.

Arles, can you provide a link to where you found that the 5.4% tax applies to business? The only references I can find apply to individuals with those income levels.

Very well done speech (saw some clips as well). It's a shame that neither Bush's nor Obama's military system allowed for us to complete the dots on what was an obviously misguided person. My hope is that this tragedy allows us to be more open with these links (ie, less PC) in the future. There's no reason this had to happen given what was out there about Major Hasan prior to the shooting.

Money re-invested within the business would not count toward your income. If you are extremely levaraged while taking home over $500k in profits every year on your small business, you are doing something wrong. You should be paying down your debts.

What other choice do they have? Simply stop making phone calls? If you are a 500K business and are asked to cut 10%, that will mean a job for most people. So, in the above situation, that business will simply go from netting 100K to netting 90K and achieve the 50K needed to pay off that new expense.

If your small business is making $500k in profit every year, you should have a nice nest egg set aside.

And if your company was hit with this, would you really cut out a profitable division of your company? How does that make any sense? My company runs a number of websites. The last thing I'd do if my personal income was cut would be to cut out a profitable website. That's just lowering your income even more.

So you are telling me that if you were taking home $500,000 a year in income, you would dramatically change the landscape of your company if that income went down to $475,000? Are you using Scottie Pippen's financial advisor? I'm not saying it wouldn't suck, but why would you make the problem worse by cutting out profitable parts of your company?

After the past election (specifically, all of the "Joe the Plumber" talk), I am convinced that a majority of Americans do not realize this.

The reality is that many people with businesses under $1 million file much of that income on their individual returns. Here's a good breakdown:

Chart: How 5.4% Surtax Hits Small Business, State by State | Fix Health Care Policy

For those who don't want to go into the above link (or can't at work), 1,222,000 small businesses will be impacted by the 5.4% tax in the US. What really worries me, though, is that that 500K isn't indexed for inflation. 5-6 years down the road (given the level of inflation we should expect in this climate), that number could be doubled.

I'm a little leery of the validity of those numbers, when the source for their chart is "Source: Calculations using Heritage income tax model and IRS tax data, estimates rounded." The Heritage Foundation was one of the main architects of Reaganomics, and their tax model is going to be heavily skewed towards a supply side model.

Some of the more profitable companies are extremely leveraged in real estate, investments or other costs associated with business growth. There's a limit to what can be deducted and much of their revenue ends up on a tax
sheet. So, yes, they could opt for option 3 from above and sell some assets - but that's not without a cost to their business (often more painful than letting go an employee).

Even if that's the case, why use that to pay a revolving 50K debt? In 2-3 years, that nest egg will be gone. You have to reduce expenses or increase revenue to pay it consistently and that's where assets and jobs come in.

Of course not, but you may remove an employee and work on that website yourself. Often what happens is that the business owner simply takes more work on themselves in these situations. So, if I employed 4 people to do catering and went out on 2-3 jobs a week myself, the best course may be for me to employ just 3 people and go out on 5-6 jobs a week myself to make up for it. Other may decide to let the one person go and do just 4 jobs a week instead of 5.

What I am saying is that if I employed 4-5 people in some type of services business, I would probably look at reducing that number by 1 before I started "using my nest egg" or depleting the companies reserves to pay for a new yearly cost. It could also be that I don't use a certain vendor service and overwork my employees to cover that (or do it myself).

I'm not saying it wouldn't suck, but I could probably get by with one fewer person on a 500K business as opposed to eating a 50K expense with no additional revenue.

Arles: Talk to your wife. First, 500k in revenue isn't 500k in profit. Second, the tax only applies to taxable income past 500k. 500k in taxable income does not mean you'd pay 5.4% on every dollar from 1 to 500k.

As of 2008, there were around 24 million small businesses in the US. 4% would amount to around 960K. So, your source says about 960K, mine says 1.2+ mil. Let's just meet close to the middle and say 1 million small businesses will be impacted. Sound fair? ;)

Here's a good article on my non-index for inflation fear:

Health-Care Bill Doesn't Index for Inflation; Hits Young and Rising Middle Class Hard - WSJ.com

At the end of the day, my point here is that you have all these costs that are being unloaded on small to medium sized business and higher rate individuals for a system that probably won't improve the cost or quality of care to nearly every person out there who has employer provided PPO coverage.

Seems like a lot of money for a minimal return - especially when much less expensive actions could be taken to target those who need better insurance options (but done within our current system).

If you want to talk deception, I would say to start with your 4% source. The 1 million impacted is only 4% of the total small businesses. But, 19.5 million business don't employ people. So, if you make the assumption that business that employ people tend to make more money than whose who don't - the number is closer to 20% (1 mil in the remaining 4-5 million).

Does 20% count as "many" to you?

--EDIT, the numbers I was using was from a 2004 business census, not 2008. So, it probably is a lot closer to the 1.2 million number above.

A serious question. You claim to support providing coverage for the uninsured. How would you fund it? The overwhelming portion of the money in the House bill is for covering the uninsured, how do you do that without somehow coming up with the money to pay for it?

I think that focusing on providing subsidies, tax credit or even just tax deductions (esp for self employed) to people in the following situations would be a good start:

1. Self employed
2. pre-existing conditions that impact insurance options
3. Making less than a certain amount of money a year

You could also go the way of giving some incentives to the individual/family and others to the insurance companies if they cover a person in the above situation (esp for the pre-existing conditions). I think there are a lot of options to be tried here that could help land the uninsured in an existing private insurance plan.

It would cost money, but nowhere near what will be needed to have the government run the whole thing.

In 2004, non-employers accounted for 3% of the total revenue generated by small businesses. That means that 97% of the revenue was generated by the 5+ million who employ people (many impacted by this tax increase).

But they still have to pay this non-indexed 5.4% - plus the additional rates on cap gains/dividends. This is going to be a hit to many small businesses who employ people. Most have investments that will now see a lower rate of return in addition to the 5.4% tax.

I have no idea what this means. I'm more than willing to get poor people "all the care I deserve" by finding ways to get them more affordable options to private insurance plans. Not start a whole new system that may end up negatively impacting people with good coverage now.

Sounds like we should probably cut that as well. You'd be hard pressed to find an area of the federal government that I am not in favor of some level of spending cuts on.

as an aside, our HR estimates that about 15-25% of the hourly employed people (min rate is around $15/hour) choose not to take our health care coverage. So, they have access to the plan I'm on (or a cheaper one with a slightly higher copay - $20 per visit instead of 10-15), and they "choose" to be uninsured.

I have a feeling this is the case for a lot of hourly people who may not even know how to sign up (or think they need to). A great start may be to focus on educating people on how to sign up for coverage and setting up some government initiatives (and even tax breaks) to encourage people with options to sign up.

I love how the bill doesn't kick in for three years.


Not a fan of the bill at all (or a lot of this adminstration/congress), but that is just me.

Arles: How do you pay for all those subsidies and credits?

The thing is, there are no options. I can speak directly to this since my Mom has them and can't get insurance. She probably has a net worth of well over a million dollars thanks to inheritance, investments, and her home value. She can afford to pay even a super high rate. There are no options, no one will take her on at any rate.

This is part of the health care debate that goes unnoticed. It's not about money for some people, it's more of a factor in just not winning the genetic lottery.

You're insane trying to argue that someone making a million a year in income is somehow magically going to have to alter his business over having to dole out a few bucks in tax. Not sure if someone mentioned it, but the tax doesn't start till $1 million if you are married.

Here's the thing. I'm against the tax. I think the rich pay way too much right now and that it's bullshit that so many don't pay a dime. I just think this trickle down scare tactics are bullshit. It's just a dumb gimmick by the party to avoid saying the truth, the rich pay too much. Just because you tax a millionaire a few percent more doesn't mean everyone is losing their job. That's especially true with small businesses where the value of an employee means much more.

Plus States can't print money, so if they implement a failed plan they have to change it, a la Tenn Care. That means there is accountability. Something lacking with every Federal Gov. plan to date.

What's amusing is that about 10 key guys are on here debating health care every day and coming to absolutely no agreement. But they are dumbfounded with politicians who are even more ideological then them can't either. It's the same political party guys! The exact same one! There is never going to be an end result that is best for the people, they don't work for the people anymore. They just differ on how they want to spend your money and what promises they can make to fool you into voting for you them again.

but if it's led by the states you end up with an unequal playing field for businesses in different states, or different offices of multistate businesses

The states idea is dumb. So I have to get a new insurance company everytime I want to go on vacation? This will make cross country road trips just dandy.

Not sure what you mean here. Are you saying that health care that is cheaper in one state will inspire businesses to open there? If so, isn't that part of what makes a health care model work or not work for a state? Look at California, they want to provide everything for everyone and it has bankrupted the state. That means it (California's way) does not work. What is this equal playing field garbage? Once you start diverging in philosophy and application, one way will pretty much always be superior to the other. That is how using states as laboratories works. You try many different concepts and then through natural process, best practices start to appear accross the board.

That does not make sense to me. I have health care with a provider in the state in which I reside. If I travel to California and get injured, my insurance still covers me. It can still work that way.

Amen.

You know, I was just realizing something.

The Kos Kiddies of the left are doing the exact thing that the Freepers on the right did during the two Bush administrations did (especially the latter stages to currently).

They mistook getting the centrists to go along with them as a sign that the country had shifted to their side of the ledger. They're so intent on enforcing hard-left ideological purity (there's talk about not giving to the DNCC, etcetera, to punish the ones who voted against the health care bill) that they don't realize that the pendulum has gone as far left as it's going to, and it's currently swinging back slightly to the right.

Rather then realizing that the nation governs from the center (sweeping Center-Left to Center Right, and back, really), they're thinking that the country will forever go further and further to the left to their dream nation. It's not going to happen. And all they're doing by trying to move their party hard left is make the pendulum's move to the right look worse."

posting this since it somewhat makes commentary about Fox News handling of, well, News (We get a lil Bachman Crazy in the clip too which is always fun):

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Sean Hannity Uses Glenn Beck's Protest Footage
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

Yup. I visit Kos a fair bit now, in large part to remind myself that, while the crazy Right might be louder than the crazy left, the crazy left still has a lot of crazy in it.

Under the scenario of states controlling everything, hospitals do not have to see you even in emergency situations. That is a federal law which would be void. Even if you had insurance, the hospital could be out-of-network, in which case the hospital could simply reject you.

I'd have to make sure I had insurance coverage at every hospital I traveled by on my vacation.

The partisian blogs seem to be more concerned with whining about what the other side is doing than what they can do to change things.

For good or bad I really dont read the blogs, of either side.

How is that different from now? First, ERs will always provide service (even to uninsured). But, I work one block from the Mayo Clinic Hospital in Scottsdale. My insurance doesn't cover the Mayo. So, if I go in tomorrow, they are out of network and I have to pay. I have a family friend who runs a family practice. I trust him for health issues I may have, but he isn't covered. If I see him, I'm usually paying $70-80+ for the office visit. It's worth it to me to see him 2-3 times a year, but I am paying out of pocket.

If I go on a trip to California, there's a chance a doctor/specialist/hospital won't take my insurance now.

Because the reason hospitals are required to treat you is because of a federal law that mandates it.

Because many hospitals do not like having to deal with insurance companies that are not associated with them. Without a federal law that mandates that these hospitals must see you in the event of an emergency, they would have every right to look at your insurance card on the way in and say to the ambulance "we don't deal with Blue Cross, send him to the hospital 30 miles down the road".

Maybe the answer is to leave that federal law in place and not to create a federal run health care system.

Looks like the Obama administration is finally starting to see that the frontal attack and boycott of Fox News wasn't in their best interest. Dunn has been moved to a different position and Obama has scheduled an interview with Fox News. Not sure why they wasted 4-5 weeks of resources fighting that battle only to give in and do what everyone was saying they should do in the first place.

Obama To Give Interview To Fox News

MBBF, what are your thoughts on the daily show clip above and what Fox News did in their coverage there?

and just to clarify another one of your 'Looks Like...' comments:


you may be one of the most inaccurate posters in the history of the web.

From an April 30 Politico piece on Dunn joining the White House:


From an October 19 piece on MSNBC:

There's obviously no context there, so it's tough to assess. Was the script by Hannity supposed to involve a mention of the previous rallies and was skipped due to Bachman rambling on or did they intend to manipulate the situation? I don't know and you don't either. But it makes for good humor from the 'non-news' hours as the Obama administration defines it, so I certainly understand why they showed it. If they intended to manipulate it, they got what they deserved.

Bachman is a nutball anyway. Having to listen to her was far more annoying for me personally than showing clips from multiple rallies. Her and Ed Schultz could drive me to do bad things to other people.

wow.

What's your point? As I said, Dunn was moved to a different position. Dunn's statement that you cite was pretty good spin, but doesn't address the attacks in any way, nor does it admit that they have openly said they avoid Fox News. I'm not surprised you tried to spin it in that way.

When you say Dunn moving and Obama going on Fox are signs the WH has lost a war with Fox, you're just making things up. Dunn was interim and always expected to leave that position and from the beginning of the Fox spat WH officials said they will still do Fox interviews, but will treat them as hostile opposition. Both of the points you cite to prove the WH is backing down prove no such thing.

So I'm an inaccurate poster because the Huffington Post updated their story AFTER I read it and copied the link? It's an interesting game you play, but it's not based in any form of reality. Carry on.

wow. the spin-o-rama there is amazing.

I'd agree with you now after the update at the Huffington Post. The White House is not backing down. They're not even going to do the interview after all.