Small businesses are feeling especially pessimistic following the election, indicating that tough economic times may be on the horizon.
The small business optimism index fell to -11 last month, the lowest since its July 2010 level of -28, according to Gallup.
Small business owners’ future expectations sank as well during November.
“As entrepreneurs, small-business owners tend to be optimistic by nature, and relatively more optimistic about the future than the present. Given this context, owners’ increasing pessimism toward their future not only reflects uncertainty, but also may imply a weakening economy going forward,” Gallup wrote in a report announcing the news.
What’s more, “21% of small-business owners [intend] to reduce the number of jobs at their company over the next 12 months.”
There are many obstacles facing small businesses in the post-election climate, including the continued uncertainty wrought by the fiscal cliff.
In addition, the small-business community will have to handle new taxes, including the seldom-discussed $87 billion Health Insurance Tax (HIT) imposed by the Affordable Care Act.
The HIT is a tax messaged as a “health insurance fee” on health insurers for premiums bought on the fully insured market.
“Insurers and economists have consistently agreed throughout the health care debate that new taxes on insurers inevitably mean new costs passed along to customers,” the Stop the HIT website proclaims.
The HIT is expected to affect 2 million small businesses, 12 million employees and self-employed workers who purchase their own health insurance policies on the individual market, and nearly 26 million employees who are covered by their employers.
According to the Stop the HIT group, the anticipated cost of the tax per family is about $500 a year.
The tax is estimated to reduce private sector employment by between 125,000 and 249,000 jobs in 2021, and reduce U.S. real output (sales) in 2021 by between $18 billion and $30 billion.
“The cost of health insurance is still a top-ranking — if not number-one issue —- that’s probably the most unidentifiable per budget year,” Amanda Austin, director of federal public policy at NFIB, told The Daily Caller News Foundation.
The increased cost for health care has many small business owners thinking about not providing insurance altogether.
“Say if we are paying $13,000 a year for family health insurance, and the penalty is $3,000 per employee for family health insurance, I just saved $10,000 an employee if I put all our employees in the public pool and avoided the tax,” one small-business owner told The DCNF. “The tax is one more thing that makes is more expensive to provide a good benefit for small-business employees.”
Legislation to repeal this tax has gained bipartisan support on Capitol Hill. Louisiana Republican Rep. Charles Boustany and Oklahoma Democratic Rep. Dan Boren have introduced legislation in the House with 226 bipartisan cosponsors.
Companion legislation has been introduced in the Senate by Wyoming Republican Sen. John Barrasso, Utah Republican Sen. Orrin Hatch and Maine Republican Sen. Olympia Snowe. The bill is titled “The Jobs and Premium Protection Act.”
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