There is a great advantage to being an old codger blogger. It is the been there, seen that, done that syndrome.
The story of the day, at least in Colorado Springs, is the cost of single payer health care.
An analysis of the plan states that imposing a 6 percent payroll tax, raising the state income tax from 4.6 percent to 12.7 percent and significantly increasing alcohol and tobacco taxes would raise $15 billion a year. Combined with other savings and revenue sources, the spending would still be less than the combined amount that employers put to insurance, individuals pay for health care and the government subsidies for medical access for elderly and the poor, according to the report from The Lewin Group.
But the increase in income tax would mean families with an average household income of more than $100,000 could pay more each year, and families that make as much as $250,000 could fork over more than $30,000 a year. Meanwhile, small businesses that often don’t offer insurance would pay thousands of dollars a year more through the payroll tax.
Anyone who thinks the Colorado economy would survive that kind of hit has never been a small business person.
It is the American dream to own a small business, but single payer could turn it into a nightmare.
Statistics say that 90% of all small businesses will be out of business within five years and that 95% will be gone within 10. We owned a small business for 12 years, and it is still going, though, happily, we don't own it any longer.
Of those 12 years, our business broke even two years and lost tens of thousands in another year, so of 12 years in business, only 9 were profitable, and one wiped out the earnings of two others. In the years that we broke even or lost money, we drew no salary. In retrospect, opening that business was a mistake, but once the investment was made, closing it would have been a bigger mistake.
We did finally get our money out and had to sign a noncompete agreement in the process. We laughed all of the way to the bank because nothing on earth would have induced us to give up our holidays and weekends to go to work for the government again.
Go to work for the government, you say? I thought you were in business for yourselves.
Who benefited from our efforts? Well, the tax man did quite well with sales and payroll taxes. Government makes no investment into a business and really doesn't care if any of the owners or employees do well. If the business does so poorly that it can't pay its taxes, then the tax men come in and chase everyone out so that they can sell off the inventory and fixtures. The government is pretty brutal and not helpful or sympathetic at all when a business fails.
Our employees did ok. We didn't pay well, but they got other benefits, including some life skills. We actually told them that we expected that they would stay long enough to get training and experience but that this wasn't an industry that could or would support a family. We wanted them to be looking for better jobs and when better jobs came along, we wanted them to take them. When people understand that their boss is genuinely looking out for their welfare, they tend to stick around, so the benefit of this attitude is that we had a happy and pretty stable workforce. Counter-intuitive, eh?
We were quite open about our finances. We had an employee meeting once a year and told our employees what we were making and how we were making it. Any employee who wanted to could pull up the daily and monthly sales and profit records, and were encouraged to do so. In fact, we found that the only time we got grief from an employee about something we were or weren't doing it was because we were looking at the numbers and the employee wasn't. That openness built trust and teamwork.
They didn't get health care. The business simply did not make enough that it could pay for health care, and the employees knew it.
That brings us to a point that Democrats simply do not understand. There are many, many small businesses out there like the one just described. Most are not quite as open to their employees as ours was, but employees have a general idea how they are going. Many are a hare's breath away from closing, and will close under the weight of the tax burden Governor Ritter is proposing through the 208 commission.
Think of the magnitude of the impact of the closure of ten thousand small businesses state wide in the five years after single payer goes into effect. It might take five years because businesses that become marginal will stay around until their lease is up. Businesses that were marginal before single payer becomes law will go negative and fold more quickly.
The business described above had three bad years and still survived. If single payer had been around, it wouldn't have survived one bad year. While it is possible to justify keeping a business alive that breaks even and pays the owner no money in the process, a business that requires the owner to pay money out will close.
In this environment, businesses that close won't be replaced. Anyone recall how in the 1990's Colorado swelled with Californians? Those migrants uprooted themselves and their businesses because California became hostile to business. Those people will move again as Colorado becomes more hostile to business, and more will follow them. There will be a Colorado recession complete with thousands of empty storefronts and houses that can't be sold.
When the Democrats realize that they have destroyed the economy with single payer, they won't back off. The monster they will have created still will have to be fed, and the only way to feed it is with ever higher taxes on the businesses that remain.
We can thank people like Tim Gill, Pat Stryker, and Jared Polis for the monster they have handed the people of Colorado in the form of a Governor and a legislative majority that has no business experience and can't see this coming. They deserve to lose their fortunes but won't. The people who will lose their life savings are the small business people and their employees who can't step aside quickly enough.
Added: Ben DeGrow says:
After all, it’s only one of five plans the commission is floating. Once we all waste our ammunition shooting down the big, bad, scary plan, the Democrats will try to sneak through one of the less offensive (but still $1-3 billion a year costly) alternatives. Mark my words.
That may be true, but we have a lot of people out there who think small business owners get rich on the backs of their workers. It doesn't happen often, but still Democrats want to kill this goose.
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