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ObamaCare perversions: Sobering reality

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Saturday, May 29, 2010

ObamaCare will hurt, not help, small businesses -- and their employees -- because of provisions that defy economic common sense.

In fact, ObamaCare tax credits that offset health insurance costs for firms with 25 or fewer workers making an average of $25,000 annually are counterproductive for employment and wage growth -- a major economic shortcoming, particularly when far too many Americans are jobless.

One author of a new National Center for Policy Analysis study on the credits even told The Hill newspaper that they create a "perverse incentive not to have businesses grow by not encouraging them to hire new workers."

The tax credits decline as a firm's average pay rises -- and as a firm's work force expands beyond 10 employees, disappearing entirely once it reaches 25 employees. That discourages such small businesses from adding jobs, particularly higher-paying ones, or raising wages.

And that spells bigger trouble for workers who don't make a lot to start with.

"An unintended consequence ... is that some low wage workers will be unemployed who otherwise would not," says the nonprofit, nonpartisan center that did the study.

That's the sobering reality behind ObamaCare's soaring rhetoric -- and another burden for America's struggling economy.

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