Gov. Ed Rendell's grandiose scheme to force Pennsylvania businesses to pay higher taxes to provide health insurance to all uninsured residents would ruin the state's economy, according to an independent assessment by an advocacy group for small business.
Rendell's payroll tax to fund his "Cover All Pennsylvanians" plan would cost the state at least 167,000 jobs over the next five years, according to a study released by the National Federation of Independent Business.
Of those losses, 103,000 jobs could come from small employers (those with fewer than 100 workers). Rendell's tax-and-spend policies over the past five years have severely crippled Pennsylvania's small businesses. The health care tax would put many small firms (the backbone of Pennsylvania's economy) out of business.
"The 3 percent payroll tax on employers who presently cannot afford to provide health insurance to their employees would hit roughly 50 percent of all small employers in Pennsylvania," said Bruce Phillips, a researcher who compiled the report for NFIB. "That tax, along with insurance premiums and accounting costs, will cost small-business owners in Pennsylvania an estimated $1.9 billion annually."
Kevin Shivers, the Pennsylvania state director for the NFIB, said he was not surprised surprised to learn the added costs could cripple many Pennsylvania employers, as many small job providers are already struggling.
"Small-business owners are already struggling with an increasingly competitive global economy and rising energy bills and other costs -- a whopping new payroll tax could put many of them out of business permanently," Shivers said.
Shivers is also concerned the Rendell proposal would do little to address the fundamental problem of affordability, but could exacerbate the problem by expanding the size and scope of state government with a payroll tax on those who can least afford it.
(Rendell has been promising property tax cuts in Pennsylvania for the past five years, but has failed to deliver. Rendell has also vetoed a Republican measure to reduce the state income tax, which is also paid by business owners.)
Rather than focusing on building a larger role for state government in health care, Shivers suggests "legislators focus on measures to expand consumer choices and improve quality of services at a lower cost."
"Providing more options and greater flexibility for employers to provide health care to their employees ought to be our goal -- not creating a vast and costly bureaucracy that in many cases will do more harm than good for struggling small-business owners."
For more on the study, visit www.nfib.com
Republican state lawmakers have offered their own plan (The Real Prescription for Pennsylvania) to fix the state's failing health care system. To read more, go to www.HealthCareForPaFamilies.com
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