Health Insurance Tax Credits Improve Economy, Grow Small Businesses and Help Families Survive
By Rep Jay Love
As part of Gov. Bob Riley's economic stimulus and job creation package, I am once again sponsoring legislation this session that encourages small business owners to provide health insurance benefits to their employees. Rather than creating a large bureaucratic government program to accomplish this goal, as the federal government has done in the past, my bill simply provides tax credits to employers and employees in order to offset the cost of providing health insurance.
The bill allows small businesses to deduct twice the amount they pay for employee health insurance coverage from their state income taxes. And, in order to ensure that employees participate in their employers' health insurance plan, workers may also deduct twice the amount they pay for their coverage.
Only companies with 25 employees or less would qualify for the tax credit, but that covers more than 90 percent of the businesses currently operating in the state. Similarly, only those employees with an adjusted gross income of less than $50,000 would qualify, as well.
While government has worked for years to ensure that lower income families and individuals are provided health coverage through Medicaid and similar programs, many lower-middle and middle-class families find it difficult to afford the same level and quality of coverage. In short, the middle-class is being squeezed between those who can't afford insurance coverage and those who can. Providing income tax credits to encourage health insurance coverage creates a free market solution to a serious social problem.
If passed successfully, this legislation could dramatically decrease the number of Alabamians who do not currently have access to affordable, quality health insurance while, simultaneously, strengthening our economy by helping small businesses grow.
As someone who has owned and operated a small business myself, I know, personally, how difficult and financially straining it can be to cover the cost of providing employee benefits, such as health insurance. Even when those insurance programs and other benefits are offered, employees of small businesses often find it even more difficult to pay the portion of the premium for which they are responsible.
Last year, I joined Gov. Riley in a news conference at a local dry cleaning business in Montgomery. The owner of the business, Matt Hall, said the tax credits would greatly expand his ability to provide health insurance coverage to his 18 employees and their families. There are thousands of business owners across this state just like Matt - small business owners who are committed to their employees and care about providing them the benefits they deserve.
That is why the Alabama Chapter of the National Federation of Independent Business embraced this legislation and asked each of its members to push for passage. Rosemary Elebash, NFIB's Alabama state director, also joined Gov. Riley and me at the news conference last year and said, ""This is a critical session for small business. Economic conditions are good today in Alabama, but the governor and Rep. Love recognize the serious threat small-business owners are facing through lack of access to affordable health insurance. This proposal is a significant step in the right direction to address this serious small-business challenge."
Members of the Democrat leadership in the legislature and others across the aisle have, to date, been timid to support this much needed legislation despite the fact that they previously worked with me and other Republicans in a bi-partisan manner to provide tax relief to many of Alabama's families. We should now work together just as hard to lend a helping hand to the middle-class workers and employers who keep our state's economy running.
Democrats have joined with Republicans on a national level to work for similar health insurance tax credits in the federal tax code. More than 100 congressional Democrats co-sponsored the Federal Small Business Health Insurance Promotion Act of 2005, a measure that closely mirrored the intent and goals of Gov. Riley's legislation. If Republicans and Democrats can each support health insurance tax credits in Washington, where the partisan atmosphere is even thicker than in Montgomery, why can't Democrats join with Republicans in Alabama in a similar cooperative fashion?