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What A Freaking Mess

October 30, 2009, 9:57 am

It takes eleven pages just to summarize the new 1990-page House government health care bill.  Here is the summary.

The implications for my business is staggering.  I have already mentioned in the previous post that it imposes an 8% tax on wages on my business -- a business where 50% of revenues go to wages and margins are in the 6-7% range.  You do the math.

Worse for us is that nearly all our competitors are ma and pa companies with less than $500,000 in wages a year, meaning that our competitors will be exempt from these taxes, giving them an automatic 4% cost advantage over our company.  Great.

Twelve seconds after this thing passes, I will be on my phone to my attorney to figure out if it is possible to break my company into multiple corporations that all fall under the 500,000 wage limit.  The paperwork and administration for this would be a huge hassle, but it can't be as high as 4% of sales.

Beyond this, I have not seen the detail yet, but the old House bill imposed enormous record-keeping obligations on businesses.  Basically, I would have to know at all times exactly what kind of medical insurance policy every one of my employees has.  Barf.

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Category: Health Care
  • http://politicalcalculations.blogspot.com/ Ironman

    "The implications for my business is staggering. I have already mentioned in the previous post that it imposes an 8% tax on wages on my business — a business where 50% of revenues go to wages and margins are in the 6-7% range. You do the math."

    Okay. Adapting a tool we originally created to consider the impact of a minimum wage increase upon small business, altering the input data to reflect an 8% increase in wage expenses, with 50% of all costs represented by wage-earning labor and 100% of your workforce impacted, your business' 6-7% profit margin will be reduced to 2-3% if it remains in its current form.

    In simpler terms, if we assumed that all the revenue represented by your profit margin goes to paying yourself and investing in your business through improvements and expansion after meeting all payroll and other expenses, the money available to do any of these things would be slashed by more than 50% in even the best case scenario.

  • Mesa Econoguy

    Beyond this, I have not seen the detail yet, but the old House bill imposed enormous record-keeping obligations on businesses. Basically, I would have to know at all times exactly what kind of medical insurance policy every one of my employees has.

    Again, why are you surprised by any of this? The flaming liberal lawyer jerkoff morons writing this shit have never held a job in the private sector, much less run a for-profit organization. GSPâ„¢

    Also, just wait for financial services "reform." That will also impose absurd recordkeeping requirements on not just financial services and businesses, but everyone. Wait for that to hit.

  • CMJDad

    Ouch

  • Republic

    Mesa,
    I don't think Coyote is surprised by any of this. None of us are.

  • joshv

    I see a definite business opportunity here - create consulting and management firms that specialize in rendering medium sized companies into a collections of small companies, designed to evade the regulation du jour. The management company takes a fee of course, but it would hopefully be less than the cost of the regulation thus avoided.

  • Charlie B

    Many small companies have already split themselves into small chunks to avoid Federal mandates like OSHA, diversity quotas, and unlimited feel good time off.

  • Fred Z

    The worst result: respect for the law dies. You will all be tax cheats, employment law cheats etc. The more you do that, the more you will hold other laws, lawmakers and law enforcers in contempt.

    There is some good to all this: More people will understand that the government is a necessary evil. Necessary but EVIL.

  • Reformed Republican

    Necessary but EVIL.

    I would agree with half of that.

  • http://herdgadfly,blogspot.com/ gadfly

    Warren:

    You might want to consider outsourcing your current employees through a temporary agency, specifying that you want to hire seasonal contract personnel. You might even want to form a separate temp agency to hire and fire and write paychecks.

  • http://www.aguanomics.com David Zetland

    I've said this once, I've said it a million times: End employer provision of health insurance and require that employees buy their own insurance. That will level the field! http://aguanomics.com/2009/08/few-more-thoughts-on-health-care.html

  • anon

    I am so glad I changed careers....from engineer to lawyer.

    Obama in 2012!

  • Dr. T

    I started writing a comment about splitting up your company, but joshv beat me to it.

    The old dictum of economies of scale no longer applies when socialists run the country.

    Gadfly's suggestion won't work: Getting employees through outside agencies would add much more than the 4% hit the insurance fiasco will cause. The only time I've seen this work is when you fire costly union employees (such as janitors) and replace them with agency workers.

  • dr kill

    David Zetland- when you're right, you're right. And you are right about the best method to fix health cost inequality. It should also all - or none- be tax-deductible.

  • John

    Go Galt.

  • Stan

    Warren, avoiding that 4% is unpatriotic. Ask Joe Biden.

  • http://maxedoutmama.blogspot.com MaxedOutMama

    Employee leasing. You don't employ anyone. You contract for all your employees.

    It will be a great business for a while! You should consider setting up your own companies to do it.

  • Missy

    Now it makes sense why there is an entire section devoted to 1099-MISC filing requirements by businesses to ALL PERSONS, with persons defined as individuals AND CORPORATIONS (and other business entities). They already figured that small business owners would simply look to split and pay across two corporations (ie. lease workers from one or other services from one to the other) and the new regulations on 1099-MISC make perfect sense now!!!

  • Michael

    I wouldn't think that splitting in to separate companies would be to difficult. It's pretty common for building contractors to set up a new company for each project in case a project goes bankrupt. It's sad that you'd have to needlessly break up a company to protect yourself from government. But your size company might very well be the size company the liberals wish to rid this country of.

  • Jim Collins

    Sure David. I have no problem with that, provided that my employer raises my wages the same amount that he currently pays for my health care now. It will never happen.

  • M Heiss

    11 pages to summarize??? I bet I can do it in two words:

    Scary Bad.

  • Brandybuck

    Time to move your business to Galt's Gulch.