Tax Credit Misses Many Small Businesses

Jillian Bandes | May 20, 2010 2:00 PM

Under the new health bill, Obama administration officials claimed a tax rebate would be given to those "small" employers whose average salaries are below $50,000 and who employ less than 25 people. Zach Hoffman employs 24 people, and pays them an average of $35,000 apiece. Lo and behold, he doesn't qualify for the credit.

    Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.

    It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help—people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.

    ...To get the most out of the new federal credit, Hoffman said he'd have to cut his work force to 10 employees and slash their wages.

    "That seems like a strange outcome, given we've got 10 percent unemployment," he said.

HT: Moe Lane