Voice of Small Business: Health reform challenge well received by court

By Dan Danner

Six months ago, there was great celebration at the White House. Gathered around President Obama to applaud his signing of a misleadingly-named health care reform law – the Patient Protection and Affordable Health Care Act – was  a large group of congressional, political and social activists proudly claiming credit for ramming the measure through Congress against the wishes of the American people.

But the celebration may have been premature. Recently, the National Federation of Independent Business and representatives of 20 states gathered before a U.S. District Court and offered a well-received challenge to that law’s constitutionality, arguing that it is an illegal mandate forcing Americans to purchase health insurance.

It is vital that the court uphold the Constitution and rule that the mandate denies Americans some basic freedoms. The law directly infringes on small business owners’ ability to manage their operations and threatens their rights to create wealth-generating enterprises.

When the president officially enacted the law, he quoted the classical poet Virgil, proclaiming: “The greatest wealth is health.”  Now, as the reality of the misguided measure begins to unfold, the president might consider quoting from ancient storyteller Aesop whose famous fable, “The Goose with the Golden Eggs,” offers a more accurate picture of this scheme that will kill many job-creating small businesses.

Even before Congress passed the legislation, the Congressional Budget Office said its costs were under-estimated by $115 billion, an error that could push the total bill to taxpayers above $1 trillion. To calm the fears of small business owners, whose hard-earned dollars are among the first golden eggs Washington plunders to pay for government programs, the White House reluctantly offered a tax credit.

Like Virgil’s poems, this sweet deal was so eloquent that small business owners failed to understand the tax credit as more fiction than fact. It is complex, limited, requires strenuous qualifying tests and temporary, while health-care costs never cease rising.

Then there are the other taxes, one of which is fabled a “health insurance fee” to be paid by small businesses and individuals (but not by most big businesses, labor unions or governments) whose self-insurance plans the new law has forbidden. Bottom line: an $8 billion tax that will take wing and soar to more than $14 billion.

Plus, this law levies yet a different tax on small firms, an indirect one in the form of added paperwork and wasted time. Now, each business-to-business transaction over $600 must be reported via an IRS Form 1099, a “pay for” calculated to pluck $17 billion from the nation’s entrepreneurs to fund this reform. This is simply punishment for owners in the slim hope that Washington can reap some unreported income.

Punishing small business makes no sense, especially in an economy struggling to break free of a devastating recession. In upholding basic freedoms guaranteed by the Constitution, the federal court can help roll back this bad law before it inflicts even greater harm on the flock of America’s small business geese who, if properly tended, can lay lots more golden eggs and restore the nation’s economic foundation.

Dan Danner is president and CEO of the National Federation of Independent Business in Washington, D.C.