GAO: Small businesses say tax credit isn't worth the effort

Kyle Cheney writes on Plolitico.com ? ?The Obama administration wildly missed the mark when it estimated that up to 4 million small businesses would take advantage of a health care premium tax credit created in the Affordable Care Act, according to a GAO report released Monday.

Just 170,300 businesses applied for the credit in 2010, and most of those didn?t seek the maximum amount allowed, the GAO found, in part because most small employers don?t offer health insurance.

But another factor was that the credit was too small and the criteria too complex to lure small businesses to apply, according to tax preparers, insurance brokers and company officials who met with GAO.

?While some small employers could be eligible for the credit if they began to offer health insurance, small business group representatives and discussion group participants told us that the credit may not offset costs enough to justify a new outlay for health insurance premiums,? according to the report.

Republicans pounced on the news to paint the ACA as an unworkable and confusing thicket of regulation.

?The failure of these small business tax credits goes to the heart of what?s wrong with ObamaCare:? it?s confusing, expensive, and burdensome for the families and businesses that have to comply with it,? U.S. Sen. Orrin Hatch (R-Utah) said in a statement. ?It?s no surprise that the very part of the law that the White House said would help small businesses is, in fact, too difficult and complex for small businesses to take advantage of ? and that?s before the worst parts of the law for America?s job creators come into effect.?

In April 2010, the White House trumpeted estimates by Obama?s Council of Economic Advisers that found up to 4 million small businesses would be eligible to take advantage of the tax credit.

The credit, which became available immediately upon the law?s passage in 2010, offers to support up to 35 percent of small businesses? premiums to provide health care to workers. That support is due to rise to 50 percent in 2014. Obama administration officials said at the time they expected the provision to save up to $40 billion for small businesses by 2019.

To be eligible for the credit, employers are required to employ fewer than 25 full-time equivalent workers in the tax year they apply, pay average wages of less than $50,000 a year, and pay at least 50 percent of their employees? premiums.

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