Health tax hurting Illinois small businesses
As a small-business owner in Illinois, I've watched the Land of Lincoln struggle when it comes to job creation and economic development. Our high real estate taxes and legacy of public pension debt are already dragging us down.
As a lawyer for many small Illinois businesses, my clients tell me about their government-imposed burdens. But, hidden taxes, like the health insurance tax, or "HIT" as it's become known in the small business community, threatens us and the very livelihood of Illinoisans.
The Affordable Care Act (ACA), or Obamacare, has changed the health care landscape across the country - and more changes are coming. Unfortunately, the new law gave birth to an egregious new health care tax on small business - and it impacts the budgets of families across Illinois.
The HIT is one of the largest, often-overlooked tax hikes included in the ACA, signed into law in 2010. Analysts projected the HIT would generate over $100 billion in the first 10 years of implementation and another more than $200 billion in the second 10 years.
The tax took effect in 2014 and absolutely slammed small businesses like mine, generating $8 billion the first year.
This year, the tax is set to increase another 40 percent. The enormous impact on the small business community manifests in the form of increased premiums on employees, cutting directly into family budgets and the financial independence of millions across Illinois.
As the HITs keep coming, recent data shows we can expect that between 2,798 and 5,547 Illinois workers will lose their jobs by 2023. Those in my state, as well as all Americans, deserve better.
Thankfully, cooler heads in Congress recognize this massive burden on the small business community and are taking action. Earlier this year, legislation to repeal the HIT reached a critical milestone - a bipartisan majority of 218 members of Congress signed on to House Resolution 928 to repeal the HIT.
Proudly, nine Illinois representatives have co-sponsored legislation to repeal the HIT, including Republican Congressman Bob Dold, who led the charge for the small business community in his district on this important issue.
But more needs to be done - and fast. Experts suggest the HIT will impose $159 billion in new taxes on the small business community, their employees and the self-employed over the next decade, costing each family approximately $5,000 in higher premiums, according to an analysis by former Congressional Budget (CBO) Director Douglas Holtz-Eakin.
In 2015 alone, the tax will collect $11 billion from working class families across the country. A recent study by the National Federation of Independent Business Research Foundation found that the HIT would cost between 152,000 and 286,000 private-sector jobs nationally - more than half in the small business community.
These aren't just numbers. These are people's lives and families. It's too important not to act. Small businesses are the engine that drives job creation in Illinois and across America. While we can never expect certainty in business, we can at least seek affordability, especially when it comes to something as important as our employees' health care.
We small business owners want to provide health care insurance for our employees; we want our employees to feel secure when illness strikes. Repealing this overly burdensome tax would go a long way toward providing some much-needed stability for our small business community - and the many families who support it.
Rick Lesser is a partner in the law firm of Lesser Lutrey McGlynn & Howe LLP, Lake Forest.