Monday, February 11, 2013

Obamacare costs and high taxes vs. globalization

February 11, 2013

For those of you who are in favor of health care reform and the new Affordable Care Act taxes, prepare for a rude awakening as to what has really taken place as of Jan. 1.

We have a small business that employs about 20 people in the United States. Most of the employees earn less than $50,000/year. They were not expecting to be impacted by the change in tax policy that the federal government has enacted through Obamacare nor were they prepared for the increases that were just passed.

We process payroll twice a month in our company. When comparing our company and employee tax liabilities to the same period last year, the cost for each employee has gone up.

For the same number of employees, we (as an employer) are now paying an additional $4,400/month and our employees are paying an additional $2,400/month for a total of $6,800 or almost $82,000/year.

Of that amount, employees are paying an increase of $28,800 and our small business is paying the rest - nearly $53,000.

To balance this, we need to consider eliminating a position or shifting the position to our offshore group, where we won’t have this burden. That’s right, we employ overseas.

Before you call me a traitor consider this: we used to employ nearly 100 people in the United States but, guess what, factors that caused us to move overseas included a lack of trained work force, high turnover due to poor work ethic in the U.S. (we were at 20 percent and now nearly zero) and, yes, the escalating intrusion and taxation by our government.

We don’t pay “sweat shop pay rates.” Our wages are competitive to what we were paying here in the U.S. But the people overseas are just better skilled and they are more committed, meaning that they stick with their employer and turnover is non-existent. Say what you want, these are the facts from someone that is dealing with them.

It’s interesting that so many people fell for this scheme by our government leadership. How stupid are we really! Did we really believe that increasing taxes would only affect the wealthy? Did we really believe that Obamacare would fix our health care system? Do we really believe that bigger government is the answer? What is it going to take for us to see the truth?

Perhaps the first few payroll runs for 2013 will do it.


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