03/12/2008
Testimony Before the Ohio House Access and Affordability Committee, Rep. Raussen, chair
Mr. Chairman and members of the House Access and Affordability Committee, my name is Ty Pine and I am here on behalf of the more than 25,000 governing members of the Ohio Chapter of the National Federation of Independent Business to provide a small and independent business perspective related to health insurance and the proposed tax credit in H.B. 456. I want to thank Rep. Raussen and the committee for your leadership on health insurance, and commitment and sensitivity to small business issues.
NFIB/Ohio is the state's largest small business advocacy organization dedicated exclusively to the interests of small and independent business owners. Our membership represents the entire spectrum of the business sector, ranging from one-person operations to quite substantial enterprises. The typical NFIB/Ohio member employs fewer than 10 workers and has average annual gross sales of about $500,000.
As the debate on healthcare reform and the specifics of H.B. 456 are discussed, I thought it would be helpful to share the principles NFIB is using to engage in the debate. Attached you will find a copy of those principles. Specific to today's topic a $1,000 tax credit for individuals who do not have employer subsidized health insurance, the principles of affordability and unbiased treatment are considered.
The No. 1 concern of small business owners, above government regulations, paperwork requirements and even taxes, is the cost of health insurance. This is not only the case today, but this has been the case every year since 1986. Annually, NFIB members are asked to weigh in on pending public policy issues via a Member Ballot process. Our members' responses to the ballots determine NFIB's position on all public policy issues. Eighty percent of NFIB members believe that tax credits are an appropriate mechanism to make health insurance more affordable.
Over half of small employers are unable to provide health insurance to their employees and nearly two-thirds of the uninsured populations are part of a family in which the head of household is self-employed or works for a small business. These facts alone point to a clear need for access to more affordable coverage. As you may know, the federal tax code, and therefore the Ohio tax code, place the self-employed and individuals at a distinct disadvantage when purchasing health insurance. While premiums paid by employers on behalf of their employees are generally deductible in calculating income and payroll taxes on federal tax returns, a similar exemption does not exist on payroll taxes for the self-employed or individuals who purchase health insurance outside the employer setting. With a 15 percent payroll tax and premiums for family health insurance premiums exceeding $12,000 annually, this bias costs a self-employed purchasing health coverage approximately $1,800/year in additional taxes. Similarly, an employee without access to employer subsidized coverage who purchases individual coverage is paying an additional $900/year in taxes. The $1,000 tax credit would go a long way in creating a level playing field and enhancing access to affordable health insurance.
As we work to achieve a balance between the goals of access, quality, affordability, predictability and choice we ask that you recognize the uniqueness of the small business community and create a level playing field. On behalf of our members we look forward to finding workable solutions to this critically important issue and encourage you to support this tax credit as a positive first step. I would be happy to answer any questions at this time.
