In the past, small businesses have led job growth after a recession. They have created 64 percent of net new jobs over the past 15 years. But they are struggling to create jobs after this recession. A big reason why: Obamacare. The Heritage Foundation‘s Paul Winfree explains how Obamacare is hurting small business job creation:
There are hundreds of thousands of taxpayers who rely on their small business income and would likely qualify for a tax subsidy that must consider the possibility that their incomes may jump, forcing them to pay back a large portion of the overpayment. This threat of a potentially large tax bill could induce many small-business owners who would likely qualify for premium subsidies to save money for the IRS rather than invest in their business or hire new employees.
Take an average small business owner qualifying for a premium subsidy – in their mid-40s, married, with two children, and a household income of about $60,000 in 2014. According to data from the Kaiser Health Reform Subsidy Calculator, their household will qualify for a premium subsidy of over $9,300 in 2014. However, since most small business owners have little way of planning how successful their business may be in any given year, they would be inclined to plan for the possibility of paying back the entire premium subsidy on top of the taxes they would already owe.
How will this influence her decision to hire new employees or invest in the business? Tax economists have studied how small business owners respond to changes in personal income tax rates. Based on the findings of those studies, the likelihood that the average business owner qualifying for the subsidies will hire new workers is reduced by about 70 percent.