Small Business Tax Credit Not Worth the Effort
This is from Chris Jacobs:
In addition, the GAO report found that bureaucracy was deterring firms from applying for the small business credit, particularly given that the credit itself was “insubstantial” for most firms. The report notes that claiming the credit requires “15 calculations, 11 of which are based on seven worksheets, some of which request multiple columns of information.” Furthermore, “tax preparers told us it could take their clients from 2 to 8 hours or possibly longer to gather the necessary information to calculate the credit and that the tax preparers spent, in general, 3 to 5 hours calculating the credit.” All of which raises an obvious question: What small business owner wants to – or is even able to – spend a full working day gathering paperwork to claim a credit that may amount to a few thousand dollars at best?
Making the process difficult and time consuming could easily be an intentional act by these bureaucrats.
A waste of time for many a small business.
Picture a company with 10 employees, 5 of whom need single coverage, and 5 of whom need family coverage.
The average wages in the firm are less than $25,000, so it is likely that the firm is not very profitable.
The employer would have to shell out about $75,000 in premiums during all of 2012. At the end of 2012, they might get back $26,000 in early 2013 if all the calculations turn out right.
The people who designed the tax credit were almost certainly academics or congressional staffers, who have never run a small business.