Get it Right on the Health Care Tax Credit

President Obama made comments today on the latest jobs numbers. In this short speech, he outlined what his Administration is doing for small businesses. Health care came up, including the new (temporary and limited) health care tax credit that some small businesses might use.

We have to correct the President about the often-repeated line from the Administration that "4 million small businesses are eligible" for the tax credit.

The President repeats this claim today:

"In addition, as part of health reform, 4 million small businesses recently received a postcard in their mailbox telling them that they’re eligible for a health care tax cut this year. It’s worth perhaps tens of thousands of dollars to each of these companies. And it will provide welcome relief to small business owners, who too often have to choose between health care and hiring."

Four million small businesses may have received a postcard informing them of the tax credit, but the post card explicitly reads: "If your small business or tax-exempt organization pays employee health insurance premiums in 2010, you may be eligible to claim a new credit on your 2010 return."

Operative word: "may."

SBE Council does hope that many small businesses are able to use this tax credit, but we don't believe many will. It is too complex, much too limited and is temporary. For those small firms that don't provide coverage, the tax credit does not offer small business owners enough incentive (because of high health coverage costs) to purchase coverage. In addition, the self-employed are not eligible for the credit and neither are the owners themselves or their extended family members that may work in the business.

Unfortunately, the President is misrepresenting the numbers of small businesses that are eligible. Again, not all of the 4 million small businesses that received the postcard are eligible for the tax credit. Your small business might be eligible.

For more information, please visit the IRS page on this matter:
http://www.irs.gov/newsroom/article/0,,id=220839,00.html

Karen Kerrigan, President & CEO