Small business taxes should be part of a minimum wage discussion.
A primary theme of President Obama's State of the Union address was increasing the wages of America's workforce and calling for an increase in the federal minimum wage. While this might be a laudable theme, the president did not acknowledge a significant barrier that may be preventing employers from increasing wages: the growing cost of doing business because of ever-increasing federal taxes, fees and mandates.
Most employers in our state are small businesses. They are owned by local entrepreneurs who provide a service or sell a commodity. They struggle to generate a positive bottom line and provide jobs. Under the Affordable Care Act (ACA), several new taxes, fees and mandates have been placed on businesses.
One ACA tax, in particular, that is a significant burden on small businesses is the Health Insurance Tax (HIT). The tax became effective Jan. 1 of this year and is placed on all health insurance policies, including those provided by small businesses. This tax will increase the cost of a family health plan by about $500 a year. The new federal levy, along with normal annual increases in the cost off health care benefits, is a major burden for employers in West Virginia that provide health insurance for their employees.
Most businesses must include benefit costs in the calculation of total wages. Companies would be positioned better to raise salaries if the cost of employee benefits were not increased by taxes like the HIT. The discussion on wages also must include all costs associtated with employees. This includes ACA taxes, FICA and other mandated costs.
If the president were serious about increasing take-home pay, he would have announced the repeal of the HIT and other employer-mandated costs during the speech. The reality is, despite his rhetoric, his own policies are impeding the ability of companies to pay employees higher wages.
As business people, we understand the effects that increased benefit costs have on wages. Employers want to increase salaries, but the government must step back and let businesses run their companies. Taxes and regulations limit the ability of businesses to prosper and increase employment and wages.
To learn more about the HIT, please go to www.stopthehit.com.
Delegate Erikka Storch, R-Ohio