I see.  Let’s cook the books so that Obama looks good.

Actually makes him look bad. A company that takes care of retiree prescriptions gets taxed higher.

That’s okay - Congress is now demanding that AT&T, Deere, and Caterpillar appear before them explaining their analysis. Nothing like a little political regulatory intimidation.

Let’s all take it easy #1 about jumping prematurely to conclusions and make sure we read the arguments and sift through the evidence.

I believe many folks will be surprised when they realize they are being taxed for their employer’s contribution to their health insurance - which is mandated in the legislation and which starts this year or next (I’m not sure which).

From Powerline:

A reader writes:

Good post on the true cost of ObamaCare. But it gets better: the Dems are now shaking down CEOs who don’t get with the program. In the attached letter, Henry Waxman not only orders the CEOs of AT&T, Caterpillar, Deere & Co, and Verizon to testify before the Energy and Commerce Committee, but also to produce internal analyses and emails related to their statements. They don’t expressly subpoena the CEOs, so we can hope that they tell the Dems to GFY, though somehow I doubt that will happen.

The Dems sent these letters to the Republicans on the committee after 6pm tonight with no advance notice or prior cooperation.

A copy of the letter is at the link.

Heard any executive orders lately?

Cough it up, boys and girls.  We’re from the government and were here to make sure you help us help you.  Capiche?

How about this one.  Say you were a night janitor, because having attended an inner city school, you were not able to go to college and had to work two jobs to provide for your family.  You decide to take the risky step of starting your own cleaning business.  You work 80-90 yours a week at your day job and your new business trying to get it off the ground.  You succeed and are able to work at your new business full time.  You still work 80-90 hours a week expanding your business and providing work opportunities for others who started out like you.  Through very hard work and perseverance you now have over 50 employees working for you.  You are generous and have provided a high deductible health plan for your employees and matched contributions to their health savings accounts.

You have not taken an excessive salary, preferring instead to plow money back into your business with the expectation that when you retire, you can sell your thriving business and live off the profit you get from selling it.

Oops! Health care hits!!  You now have to provide “full care” health benefits to your 50+ employees which is a big hit to profits since it costs a whole lot more than what your were providing.  Do you run your business at barely break even, or do you lay off enough employees to get you below the 50 employee threshhold for mandated health care?

Well, even if you slim down the business, it still will provide you with a good retirement.  Ooops! Capital gain taxes are going up by 33% next year.  Instead of paying 15% tax rate, you have to pay 20%.  That’s O.K., the business should still net your a profit of $400-500K.  Oops!  That profit from a lifetime of hard work makes you part of the evil rich and you have to pay an extra 4% Medicare tax on the profits from the sale.  Hope your retirement investment income is below $250K or you’ll have to pay 4% Medicare tax on this, too.

Gee, isn’t sharing the wealth fun.  You’ve put people out of work and lost money you worked your a** off for so you could enjoy your retirement.  See, isn’t Obamanomics fun.

I am having a hard time believing that the Commerce Sec. and the Congressional committee don’t understand the law.  GAAP require that companies recognize the present value of future obligations as soon as they become aware that those obligations exist.  The health care law creates liabilities and costs which must be recognized and dealt with financially.  To fail to do so is fraud.  Is the Congress now going to be in the business of re-writing corporate balance sheets and income statements based upon political needs?

Daniel brings up an interesting point about small businesses with employees numbering around 50. Was able to find 2004 statistics about number of employees in businesses here. It states that there were 600,000 small business with 20 to 99 employees. Assuming a flat distribution, that would mean 600,000 x (10/79) = 80 thousand businesses with 50 to 59 employees. Assuming all these firms would shed employees to get below the 50 mark, that would be an average of 5.5 employees. So we are talking or over 400 thousand newly unemployed. And there would also be 80 thousand businesses in the 40 to 49 category which would be very resistant to hiring new employees.

Thank you Katherine - this is a very important point.  These companies are not undertaking political theater - if any of them fail to do this they would be prosecuted just as the Enron execs were prosecuted.

Interesting if one thinks about the ramifications:

http://finance.yahoo.com/family-home/article/109178/10-ways-the-new-healthcare-bill-may-affect-you?mod=family-love_money

#5, that is not correct (about employees being taxed for employer contributions to their healthcare).

I suspect you are referring to the new requirement that employer contributions to employee healthcare be reported on the employee’s W2. This is true and like you, I can’t recall if that goes into effect this year or next. Regardless; this contribution is simply reported; it is not added to the employee’s taxable income.

And #8, you’ve conveniently left out the small business healthcare subsidy and tax breaks that the janitor and his business would receive; or the option of not providing health care and instead paying the much less expensive penalty (exempted for the first 30 employees) and allowing his employees to purchase their own coverage through healthcare exchanges.