Small Business Subcommittee on Economic Growth, Tax and Capital Access Hearing – “Lip Service but Little Else: Failure of the Small Business Health Insurance Tax Credit”

The U.S. Women's Chamber of Commerce was invited to provide a witness for a Small Business Subcommittee on Economic Growth, Tax and Capital Access hearing on the small business health care tax credit that was made available upon the enactment of the Affordable Care Act (ACA). Mr. Michael Ricco, Quality Manager at AEEC, LLC testified on behalf of USWCC.

Chairman Tim Huelskamp (R-KS-1) opened the hearing and welcomed the witnesses. He pointed out that there were several problems with the tax credit that he encouraged the panel to discuss, including the fact that it is cumbersome and poorly designed.

Subcommittee 1

Rep. Tim Huelskamp (R-KS-1) opens the Subcommittee hearing on the small business health care tax credit.

Ranking Member Judy Chu (D-CA-27) stated in her opening remarks that the use of this credit is much lower than anticipated and she was hoping to find out why only 170,300 small employers claimed the credit. She added that a big problem with the credit was that strict salary requirements and employee counts had to be met before a company could claim the tax break.

Subcommittee 2

Rep. Judy Chu (D-CA-27) points out problems with the credit in her opening remarks.

Michael Ricco testified that while his company would have liked to have benefited from the tax credit, they could not for two primary reasons: because they employ more than 25 employees and because the average annual wage of their workers is more than $50,000. He suggested that the Subcommittee make changes to the credit that would increase the eligibility threshold for the number of employees that work at a small business and remove the wage barrier that excludes so many small business and thus punishes them for paying their employees well. He also recommended that legislators raise the credit so that it is more cost effective for small businesses to actually use it and to make it last longer than two consecutive tax years.

AEEC Testifying

Michael Ricco responds to a question from Rep. Chu on size standards for eligibility.

Rep. Chu asked Michael what standard they could use for determining the size of a company. He responded that they might consider breaking it down by NAICS code since companies already are broken down in that manner and that like industries would then be clustered together for eligibility purposes.

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