Healthcare Reform
Issue Status: Since 2005, NFIB has killed a dozen mandated healthcare reform bills that would have crippled small businesses with new payroll taxes. In January 2007, the governor announced that it would be the "Year of Healthcare Reform." Despite many efforts, including the unsuccessful Assembly Bill 8 (Nunez), which would have imposed a 7.5 percent payroll tax on employers, we have yet to see reform get off the ground. Several NFIB members were able to meet privately with Gov. Arnold Schwarzenegger and his staff to discuss the reform efforts that they support, and remind him of their opposition to mandates and more taxes.
As 2007 ended, a new proposal was put forth by the Speaker Nunez and Gov. Schwarzenegger. Under the new plan, businesses with up to $250,000 in payroll would have been forced to cover their employees' healthcare or pay 1 percent of payroll into a state-run pool for healthcare. Those employers with payrolls of $250,000 to $1 million would have been forced to pay 4 percent. From $1 million to $15 million, the tax would have been 6 percent. Over $15 million, the levy would have been 6.5 percent. Thankfully, the Senate Health Committee rejected the bill and it died in committee in early 2008.
NFIB Position: NFIB believes that any mandated payroll tax will cause Californians to lose their jobs. A study by the NFIB Research Foundation in 2007 found that a 7.5 percent payroll tax, as proposed in Assembly Bill 8 (Nunez), would have cost California nearly a quarter million jobs -- largely entry-level jobs. Recently, in a new study focused on the effects of ABX1 1, it was discovered that the bill would have caused 41,000 small business jobs to be lost over the first five years of enactment -- with the greatest job loss occurring in entry level jobs in retail, trade, accommodation and food services, and construction. Moreover, ABX1 1 would have resulted in an $8.2 billion loss in our state's economy over that same five-year period.
A mandated healthcare payroll tax of any amount will have a potentially devastating impact on small businesses in California. Most small business owners aren't left with much, if any, money at the end of the day once administrative, payroll, overhead, operational and other costs are covered. So, when state leaders begin increasing taxes to pay for healthcare, small business owners have good reason to be nervous. Government is forcing them to spend money they don't have. They'll have to hike prices, thus driving away valued customers (and income), or make cuts -- most commonly, laying people off -- to keep their doors open. Some will be forced to close their doors altogether.
Issue Status: While all proposed healthcare reform plans have failed, this issue is far from dead. There will be more proposals in the coming weeks and months, and NFIB/California remains ready to oppose any proposals that include increased taxes and employer mandates.
