Opinion: Supporting small businesses will continue our economic growth
With the backdrop of one of the most contentious and controversial periods in generations, Congress, the president, and the state of Michigan are poised to deliver three very significant policy changes that will help small businesses and their employees grow and improve their competitiveness.
The cost of health care consistently ranks as a top concern of small business owners who already struggle to fill their talent needs. The passage of the Affordable Care Act adversely impacted small business owners and their employees in several ways, including the institution of multiple new taxes that made costs rise and benefit levels fall. The Small Business Association of Michigan and most of the greater business community have long advocated for the repeal of those taxes. Finally, it is happening.
The recent spending bill that passed through Congress includes the permanent repeal of three taxes originally instituted as part of the ACA. The elimination of the Cadillac Tax — which penalized offering better health insurance benefits — will save taxpayers nearly $200 billion per year. Nixing the Health Insurance Tax on insurance providers will make an additional $150 billion difference for taxpayers.
And finally, the removal of the excise tax on medical devises stops the threat of an additional cost on our health care since it was never actually implemented before its repeal. While the tax cuts won’t take affect for about a year, this is huge news for small businesses.
In the same week, the U.S. House of Representatives approved the United States-Mexico-Canada Agreement (USMCA), clearing the last remaining significant obstacle to a rewrite of NAFTA. This is another huge win for small businesses. You might be surprised to know that 75% of the companies who export to Canada are small businesses (fewer than 50 employees); 72% of exporters to Mexico are small. That’s why we are so thrilled that the USMCA has a first of its kind small business chapter.
The overall economic impact of these trade relationships in Michigan are enormous. In 2017, 338,300 jobs in our state were tied to trade with Mexico and Canada. In that same year $9.1 billion in Michigan goods and services were exported to our North American trade partners.
Finally, business owners will see their unemployment insurance assessments to the state go down this year because of Michigan’s faithfulness in retiring substantial debt taken on during our long and deep recession before 2010.
Back in 2012, the state owed the U.S. Treasury $3.2 billion. The Snyder administration refinanced that debt with an aggressive repayment schedule which was recently completed by the Whitmer administration. Our employers have long paid higher unemployment taxes than the rest of the nation. The elimination of this debt will result in the removal of a costly assessment to employers. According to the state, businesses should see a reduction of $65-217 per employee in 2020.
From large to small, businesses operate in a global marketplace and we need to be constantly focused on creating the best environment for success. Closing the year with these three big steps forward will go a long way in prolonging this period of economic expansion.
We indeed have reason to expect a happier new year.
Brian Calley is president of the Small Business Association of Michigan and the former lieutenant governor of Michigan.