NAM Not Happy with Health Care Bill's Impact on Manufacturers

Oct. 29, 2009
Says proposed 5.4% surtax on high income is in essence another tax on small businesses as majority pay taxes at individual income rate due to how they are organized

Responding to the House of Representatives's Affordable Health Care for America Act, National Association of Manufacturers (NAM) President John Engler expressed its dissatisfaction with the additional costs that will be levied on manufacturers.

Engles points out that the bill calls for a 5.4% surtax on incomes over $500,000 and since almost 70% of manufacturers are organized as S-corporations or other entities that pay taxes at the individual income rate, this is another tax on small businesses.

"Manufacturers get hit especially hard by these tax increases because of the intense capital demands of modern manufacturing. A small manufacture's revenue is not take-home pay. It is the money needed to expand plants, invest in equipment and provide benefits including health insurance," says Engler.

He says that this additional surtax will mean that "federal tax rates will skyrocket to nearly 50% for these manufacturers (with state taxes adding even more burden.) These new taxes will have massive negative consequences for manufacturing which has already lost 2.1 million jobs in this recession."

Engler points out that 97% of NAM members voluntarily provide health benefits to their employees and therefore the proposed public option will threaten the private coverage manufacturers offer to their employees." A public option will either force private competitors to lower costs by reducing coverage or drive them out of the marketplace completely. This would make it difficult for employers to continue to offer the same benefits to their employees," he says.

Premiums will increase, says Engler, because more people will be in plans that "pay doctors and hospitals at lower, government negotiated rates, which will ultimately cause a shift in costs to private insurance payers."

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