U.S. Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, has put forward a health care reform proposal that includes a $4 billion tax per year on medical device and diagnostic manufacturers based on sales.
According to the Wall Street Journal, the “core of the industry … spent about $9.6 billion on product development in 2007,” and venture capital investment in device makers in 2007 came in at $3.7 billion.
That $4 billion would be a major hit on investment and innovation.
It’s also a tax on small, entrepreneurial firms.
In 2006 (latest Census Bureau data), there were 11,414 medical equipment and supplies manufacturers in the U.S.
Of those firms, 98.3 percent had fewer than 500 employees, and 84.6 percent had fewer than 20 employees.
Make no mistake, the proposed tax on medical device manufacturers is a direct tax on small, innovative businesses.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Friday, September 18, 2009
Thursday, September 17, 2009
Small Biz Health Care Daily: Taxes and the Baucus Plan
Explaining his new health care reform proposals in the September 16 Wall Street Journal, U.S. Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, declared: “For starters, our plan pays for every cent of new spending without using additional tax dollars.”
Really?
But the Baucus plan does feature higher taxes, including on health insurers, medical device manufacturers, clinical laboratories and pharmaceutical manufacturers; an individual mandate tax (if you don’t get insurance, you pay a tax); and an employer tax for each employee it does not provide insurance coverage.
So, obviously, despite what Senator Baucus wrote, his plan does include higher taxes for higher spending. And that’s bad news for businesses and consumers.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Really?
But the Baucus plan does feature higher taxes, including on health insurers, medical device manufacturers, clinical laboratories and pharmaceutical manufacturers; an individual mandate tax (if you don’t get insurance, you pay a tax); and an employer tax for each employee it does not provide insurance coverage.
So, obviously, despite what Senator Baucus wrote, his plan does include higher taxes for higher spending. And that’s bad news for businesses and consumers.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
The Obama Administration’s Cost Estimates on Climate Change Legislation
The Obama administration has news on its cap-and-trade regulatory scheme that it does not want the American people to know.
CBS News correspondent Declan McCullagh serves up some worrisome, though anything but surprising, cost estimates from the Obama administration. For example:
• “The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.”
• “A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration's estimate, the cost per American household would be an extra $1,761 a year.”
• “A second memorandum, which was prepared for Obama's transition team after the November election, says this about climate change policies: ‘Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation.’”
McCullagh also reported that the information was obtained under a FOIA request by the Competitive Enterprise Institute. Kudos to CEI.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
CBS News correspondent Declan McCullagh serves up some worrisome, though anything but surprising, cost estimates from the Obama administration. For example:
• “The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.”
• “A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration's estimate, the cost per American household would be an extra $1,761 a year.”
• “A second memorandum, which was prepared for Obama's transition team after the November election, says this about climate change policies: ‘Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation.’”
McCullagh also reported that the information was obtained under a FOIA request by the Competitive Enterprise Institute. Kudos to CEI.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Wednesday, September 16, 2009
SBE Economist on Inflation Data
"While the U.S. economy actually experienced a falling general price level over the past 12 months, the annualized CPI inflation rate ran at about 4.4 percent during the past three months. That's pretty darn hot. Looking ahead, even with an under-performing economic recovery, high inflation can in no way be ruled out. Since inflation ultimately is about too much money chasing too few goods, and given the historic increase in the money supply over the past year, a bout of stagflation - that is, slow growth and relatively high inflation - remains a serious risk."
Long Awaited Senate Finance Bill Disappoints Small Business
The Small Business & Entrepreneurship Council (SBE Council) expressed frustration and disappointment today after Senate Finance Committee Chairman Max Baucus (D-MT) released his plan to reform health care.
Unfortunately, the Chairman's plan will only serve to raise health insurance costs for small businesses as proposed tax hikes and government mandates in his "mark" -- along with explosive government costs associated with overseeing changes in the health insurance market, and new compliance initiatives -- will only exacerbate current conditions. Chairman Baucus released his mark today with no Republican support.
Small business owners continue to suffer under harsh economic conditions, and unfortunately the Baucus plan will not relieve us of the high health insurance costs that plague our bottom lines and competitiveness.
Following my initial read of the bill, I found that there was little offered that would support the goal of lowering health insurance costs for small business owners. In fact, new tax hikes on health insurers could lead to higher premium costs for small businesses and the self-employed as these will be passed down to consumers. New taxes on key players in the health care industry -- such as medical device manufacturers and clinical laboratories -- will also be absorbed by consumers and harm innovation and economic growth.
The "mark" will burden small business owners and the self-employed in other ways as well, including:
-- New reporting requirements: All employers would be required to report the value of each employee's health benefit on their W-2. In addition, all employers will be required to report to the IRS payments made to corporations where this is exempted under current information reporting rules.
-- Small employers with 50 employees or more (which include employees who work 30 hours each week) that do not offer insurance will be assessed a financial penalty.
-- Self-employed individuals are required to purchase health insurance under the individual mandate, or pay an excise tax penalty.
-- A new tax is imposed on medical device manufacturers, many of which are small firms.
-- A new tax is imposed on clinical laboratories, many of which are small firms.
New rules and bureaucracy weaken portions of the bill that relate to reforms that could lead to more choice and competition for small businesses - such as buying insurance across state lines and the formation of co-ops.
The tax credits are much too limited and small firms that may actually qualify for them will require a tax specialist to help figure out their complex formula.
New taxes in the health care industry will lead to higher costs for small business owners and the self-employed -- not lower ones. In sum, the bill spends and taxes too much when our country and economy can least afford it.
Karen Kerrigan is President & CEO of the Small Business & Entrepreneurship Council
Unfortunately, the Chairman's plan will only serve to raise health insurance costs for small businesses as proposed tax hikes and government mandates in his "mark" -- along with explosive government costs associated with overseeing changes in the health insurance market, and new compliance initiatives -- will only exacerbate current conditions. Chairman Baucus released his mark today with no Republican support.
Small business owners continue to suffer under harsh economic conditions, and unfortunately the Baucus plan will not relieve us of the high health insurance costs that plague our bottom lines and competitiveness.
Following my initial read of the bill, I found that there was little offered that would support the goal of lowering health insurance costs for small business owners. In fact, new tax hikes on health insurers could lead to higher premium costs for small businesses and the self-employed as these will be passed down to consumers. New taxes on key players in the health care industry -- such as medical device manufacturers and clinical laboratories -- will also be absorbed by consumers and harm innovation and economic growth.
The "mark" will burden small business owners and the self-employed in other ways as well, including:
-- New reporting requirements: All employers would be required to report the value of each employee's health benefit on their W-2. In addition, all employers will be required to report to the IRS payments made to corporations where this is exempted under current information reporting rules.
-- Small employers with 50 employees or more (which include employees who work 30 hours each week) that do not offer insurance will be assessed a financial penalty.
-- Self-employed individuals are required to purchase health insurance under the individual mandate, or pay an excise tax penalty.
-- A new tax is imposed on medical device manufacturers, many of which are small firms.
-- A new tax is imposed on clinical laboratories, many of which are small firms.
New rules and bureaucracy weaken portions of the bill that relate to reforms that could lead to more choice and competition for small businesses - such as buying insurance across state lines and the formation of co-ops.
The tax credits are much too limited and small firms that may actually qualify for them will require a tax specialist to help figure out their complex formula.
New taxes in the health care industry will lead to higher costs for small business owners and the self-employed -- not lower ones. In sum, the bill spends and taxes too much when our country and economy can least afford it.
Karen Kerrigan is President & CEO of the Small Business & Entrepreneurship Council
Small Biz Health Care Daily: Opposition Grows
If you were wondering about the impact of President Obama’s health care speech on his plan to reform the system, a new survey by Rasmussen Reports released on September 15 noted that opposition reached a new high of 55%, with support matching a previous low of 42%.
People are very wise to be highly skeptical of this entire endeavor.
The President is claiming that more government intervention in health care will save money and improve care. Just a little bit of economic common sense and some basic knowledge of history point in the completely opposite direction. That is, it will mean much higher costs and reduced access to quality care. And in fact, Rasmussen reports that 53% believe this reform will make health care costs go up, with only 17% agreeing that costs would fall.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
People are very wise to be highly skeptical of this entire endeavor.
The President is claiming that more government intervention in health care will save money and improve care. Just a little bit of economic common sense and some basic knowledge of history point in the completely opposite direction. That is, it will mean much higher costs and reduced access to quality care. And in fact, Rasmussen reports that 53% believe this reform will make health care costs go up, with only 17% agreeing that costs would fall.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Tuesday, September 15, 2009
Small Biz Health Care Daily: Health Care Agenda and the Deficit
During his big health care speech to Congress on September 9, President Obama declared: “I will not sign a plan that adds one dime to our deficits – either now or in the future.”
That’s some claim. And a good many people, I think, simply do not believe it.
After all, official estimates peg the ten-year costs for this proposal to dramatically expand government’s role in health care run around the trillion-dollar mark – give or take a few hundred billion dollars here and there. And once one understands that cost estimates for government health care programs are notorious for being dramatically low-balled at the outset, the actual costs, as noted by various estimates, will turn out dramatically higher. Note that Medicaid and Medicare, for example, turned out to be many multiple times more expensive than originally suggested, and there is no reason to believe that will not be the case with ObamaCare.
But let’s take the President at his word on the deficit issue. That is, that he will not sign a bill that is not fully funded.
Unfortunately, his dream to pay for most this proposal by “reducing the waste and inefficiency in Medicare and Medicaid” will turn out to be nothing more than a dream.
What does that all mean then? Obviously, it would require massive tax increases. The Obama agenda already features higher personal income, capital gains, and dividends taxes on upper incomes; increased death taxes; and increased costs on businesses through the health care play-or-pay mandate. Many other measures are being kicked around Congress, including higher taxes on insurance companies, clinical labs, and medical device manufacturers. And of course, there are all kinds of proposals being considered to jack up energy taxes, one way or another.
All of these proposed tax increases would raise costs for consumers and businesses; reduce incentives for entrepreneurship and investment; and severely restrain economic growth and job creation. And guess what? They still would not be enough to fund the big government health care agenda being peddled by the Obama administration and leaders in Congress.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
That’s some claim. And a good many people, I think, simply do not believe it.
After all, official estimates peg the ten-year costs for this proposal to dramatically expand government’s role in health care run around the trillion-dollar mark – give or take a few hundred billion dollars here and there. And once one understands that cost estimates for government health care programs are notorious for being dramatically low-balled at the outset, the actual costs, as noted by various estimates, will turn out dramatically higher. Note that Medicaid and Medicare, for example, turned out to be many multiple times more expensive than originally suggested, and there is no reason to believe that will not be the case with ObamaCare.
But let’s take the President at his word on the deficit issue. That is, that he will not sign a bill that is not fully funded.
Unfortunately, his dream to pay for most this proposal by “reducing the waste and inefficiency in Medicare and Medicaid” will turn out to be nothing more than a dream.
What does that all mean then? Obviously, it would require massive tax increases. The Obama agenda already features higher personal income, capital gains, and dividends taxes on upper incomes; increased death taxes; and increased costs on businesses through the health care play-or-pay mandate. Many other measures are being kicked around Congress, including higher taxes on insurance companies, clinical labs, and medical device manufacturers. And of course, there are all kinds of proposals being considered to jack up energy taxes, one way or another.
All of these proposed tax increases would raise costs for consumers and businesses; reduce incentives for entrepreneurship and investment; and severely restrain economic growth and job creation. And guess what? They still would not be enough to fund the big government health care agenda being peddled by the Obama administration and leaders in Congress.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
France’s Carbon Tax
The French are at it again. That is, working hard to make it hard to grow their economy.
Last week, President Nicolas Sarkozy announced that France would slap taxes on carbon-dioxide emissions via, of course, taxes on fossil fuels.
On September 10, Bloomberg News reported: “The carbon tax, which would be enacted next year, will be 17 euros ($24.71) per ton of carbon-dioxide emissions, Sarkozy announced today in eastern France.” The story went on later: “Sarkozy will have to overcome the Socialist-led opposition and critics in his Union for a Popular Movement who say the tax will hurt the poor and handicap employers.”
Good for the … well … Socialists (!!!???) – France can be strange.
Anyway, Bloomberg also noted: “Sixty-five percent of French voters oppose the tax, an Ifop opinion poll for Paris Match magazine showed this week.”
Good for the French.
According to The Wall Street Journal, Sarkozy actually said: “We cannot keep on taxing labor, taxing capital, and ignore taxes on pollution.” Huh? Three points come to mind. First, CO2 is not pollution. Second, taxing CO2 amounts to indirectly taxing labor and capital, as consumer and investment costs rise. Third, just because one taxes labor and capital, it does not follow that emissions must be taxed.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Last week, President Nicolas Sarkozy announced that France would slap taxes on carbon-dioxide emissions via, of course, taxes on fossil fuels.
On September 10, Bloomberg News reported: “The carbon tax, which would be enacted next year, will be 17 euros ($24.71) per ton of carbon-dioxide emissions, Sarkozy announced today in eastern France.” The story went on later: “Sarkozy will have to overcome the Socialist-led opposition and critics in his Union for a Popular Movement who say the tax will hurt the poor and handicap employers.”
Good for the … well … Socialists (!!!???) – France can be strange.
Anyway, Bloomberg also noted: “Sixty-five percent of French voters oppose the tax, an Ifop opinion poll for Paris Match magazine showed this week.”
Good for the French.
According to The Wall Street Journal, Sarkozy actually said: “We cannot keep on taxing labor, taxing capital, and ignore taxes on pollution.” Huh? Three points come to mind. First, CO2 is not pollution. Second, taxing CO2 amounts to indirectly taxing labor and capital, as consumer and investment costs rise. Third, just because one taxes labor and capital, it does not follow that emissions must be taxed.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Monday, September 14, 2009
Small Business in the Cloud?
Does cloud computing makes sense for small business?
A view from the UK is interesting.
In a piece posted on Thisismoney.co.uk, reporter Helen Loveless notes that cloud computing is growing among small firms, but also is limited as many business owners want to keep systems in house or deal with a website company they know personally.
Loveless reports:
Ultimately, it comes down to what the individual business owner views as the positives and negatives. Some will venture deeper into the cloud, while others will stay in house.
Any thoughts on the plusses and minuses, and what makes sense for your business?
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
A view from the UK is interesting.
In a piece posted on Thisismoney.co.uk, reporter Helen Loveless notes that cloud computing is growing among small firms, but also is limited as many business owners want to keep systems in house or deal with a website company they know personally.
Loveless reports:
According to Robert Epstein, head of small business at Microsoft, the number of smaller firms using cloud computing services has risen by 30% year on year. ”The movement of IT to the cloud has the potential to be a huge leveller for small and medium-sized enterprises that can now have access to IT systems that were previously only available to large companies,” he says.
“Storing information on the internet allows firms to operate at a much lower cost, work more efficiently and from any location at any time. The increase in firms effectively moving their office systems online will also help them to avoid the negative implications of external factors such as swine flu, office theft or fire.”
Ultimately, it comes down to what the individual business owner views as the positives and negatives. Some will venture deeper into the cloud, while others will stay in house.
Any thoughts on the plusses and minuses, and what makes sense for your business?
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Small Biz Health Care Daily: What About Those Pre-existing Conditions?
There’s been a lot of talk about denial of health insurance coverage due to pre-existing conditions in the health care policy debate. The answer to this problem presented by many of our elected officials in Washington has been more government mandates.
Specifically, impose guaranteed issue (no one can be denied coverage) and community rating (government limits the ability to adjust prices according to risk). The results are predictable – much higher insurance costs for all and fewer insurers in the market. And that is exactly what occurred in various states that imposed such measures, including New York and New Jersey.
There is another option that more than 30 states have implemented – high-risk pools. That is, states create high-risk pools to make coverage affordable for individuals with chronic diseases, with costs spread among insurers and subsidized by the government.
This kind of reform focused on those in need – rather than imposing mandates and regulations that expand and create more problems – makes the most sense.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Specifically, impose guaranteed issue (no one can be denied coverage) and community rating (government limits the ability to adjust prices according to risk). The results are predictable – much higher insurance costs for all and fewer insurers in the market. And that is exactly what occurred in various states that imposed such measures, including New York and New Jersey.
There is another option that more than 30 states have implemented – high-risk pools. That is, states create high-risk pools to make coverage affordable for individuals with chronic diseases, with costs spread among insurers and subsidized by the government.
This kind of reform focused on those in need – rather than imposing mandates and regulations that expand and create more problems – makes the most sense.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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