Thursday, September 13, 2012

Obamacare Reduces Tax Revenues

Obamacare. Perhaps the most polarizing piece of . . . legislation to come out of Washington in decades. The law was drafted by committee and voted on by people who never read it.

Apparently they never thought it through either, because if they did they might realize Obamacare will be responsible for reduced profits.

And profits are taxed.

Profits are good for everyone.

Especially the U.S. Treasury.

But if Obamacare reduces profits, that means less tax revenue.

The International Franchise Association held a convention in Washington this week where most of the Radio Shack, Dunkin Donuts, Curves and other franchisers were grumbling about new federal regulations, especially the impact of Obamacare.
Most, said Atlanta Taco Bell and Kentucky Fried Chicken franchiser David Barr, presumed that the reports about how hard Obamacare will hit them were overblown. "They had their head in the sand," he told Secrets.
That is until he pulled out his powerpoint showing how funding Obamacare will cut his--and likely their--profits in half overnight. With simple math the small business folks understood, he spelled out that their only choice is to slash employee hours so they aren't eligible for company-paid health care or stop offering insurance and pay the $2,000 per employee fine.
Washington Examiner, "Obamacare cuts profits", Sept 2012
Yes, as President Bill Clinton recently said, Obamacare won't work because of ARITHMETIC
OK, he didn't say that about Obamacare, but he should have.
Under Obamacare, however, he will have to provide health insurance for all 109 full-time workers, a cost of $444,000, or two and half times more than his current costs. That $315,000 increase is equal to just over half his annual profit, after expenses, or 1.5 percent of sales. As a result, he said, "I'm not paying $444,000."
Providing no insurance would result in a federal fine of $158,000, $29,000 more than he now spends but the lowest cost possible under the Obamacare law. So he now views that as his cap and he'll either cut worker hours or replace them with machines to get his costs down or dump them on the public health exchange and pay the fine
While there are not as many zero's as we normally see when DC talks about budgets, this one is easy to follow.
Lay off workers.
Save money.
Bubba math is easy.

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