The Save American Workers Act Protects Small Businesses From Obamacare Taxes


Posted by Alexander Hendrie on Tuesday, September 11th, 2018, 3:31 PM PERMALINK

Later this week, the House of Representatives is set to take up H.R. 3798, the “Save American Workers Act,” sponsored by Congresswoman Jackie Walorski (R-IN).

All members of Congress should support the Save American Workers Act. This legislation, which reduces taxes by $58.5 billion in the next decade, offers important relief from Obamacare taxes by freeing small businesses from unnecessary, job killing taxes and mandates.

The legislation provides retroactive relief from Obamacare’s employer mandate between December 31, 2014 and January 1, 2019 and also redefines an employee as an individual working 40 hours per week.

Under current law, the employer mandate tax penalty forces employers to pay a $2,000 tax per full time employee (defined as 30 hours per week) if they do not offer “qualifying” health coverage as defined by the federal government. This mandate imposes extensive costs on businesses, resulting in part-time workers being given less work. A study by the National Bureau of Economic Research estimates that as many as 250,000 small business jobs may have been eliminated by the mandate.

H.R. 3798 also pauses the Cadillac tax on employer provided health insurance for an additional year, so that the tax will not hit until December 31, 2022.

Like the employer mandate, the Cadillac Tax is devastating to employers. Under current law, the Cadillac Tax is a 40 percent excise tax on employer provided health insurance plans exceeding a value of $10,200 for individuals and $27,500 for families. This threshold includes the value of a healthcare plan, but also includes payments to Health Savings Accounts and Flexible Spending Accounts.

When the Cadillac tax was scheduled to go into effect in 2018, the Kaiser Family Foundation estimated it would hit 26 percent of employer provided plans in two years and 42 percent of employer provided plans in ten years.

Finally, the Save American Workers Act repeals the Obamacare tanning tax. This discriminatory tax is imposed directly on tanning businesses in the form of a 10 percent excise tax and has wiped out an estimated 10,000 tanning salons, many owned by women.

This legislation represents another important step toward full repeal of all one trillion dollars in Obamacare taxes. The Republican controlled Congress has already made impressive progress toward this goal:

  • Late last year, lawmakers repealed the Obamacare individual mandate tax penalty, which was one of the most regressive taxes in the code.  This tax hit 6.6 million American families and individuals. 79 percent of those paying the mandate made less than $50,000, and 37 percent of those paying the mandate made less than $25,000.

 

  • Lawmakers have also passed legislation that offered incremental relief from the medical device tax and delay of the health insurance tax. The 2.3 percent medical device tax is imposed on roughly 6,500 medical device manufacturers, the majority of which are small businesses. Half of the tax is paid by those earning less than $50,000 a year and it will increase premiums by $5,000 per family over the next decade according to research by the American Action Forum. As many as 1.7 million small businesses and 23 million families that receive coverage through their employer are impacted by this tax.  
     
  • The House has passed legislation to dramatically expand HSAs. HSAs are by 25 million American families and individuals in combination with a high deductible health plan. This package of legislation doubled the contribution limit for an HSA from $3,450 to $6,650 for an individual and $6,900 to $13,300 for a family, expanded access to HSAs by allowing working seniors enrolled in Medicare Part A to contribute to an HSA, allowed individuals with a bronze or catastrophic health plan to be eligible for an HSA, and repealed the ObamaCare restriction on using an HSA to purchase over-the-counter medications.
     

The Save American Workers Act represents another step toward achieving free market healthcare reform. Members of Congress should vote yes on this important legislation.

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