Last night the Senate passed ESSB 5899, which will provide a B&O tax credit up to $4,000 for each newly hired employee for businesses with fewer than 20 employees. It passed unanimously.
The catch? The business doing the hiring has to also offer health insurance to its employees in order to qualify for the credit. The language in the bill states,
"The credit equals: Four thousand dollars for each qualified employment position with wages and benefits greater than forty thousand dollars annually, and for which the business offers a health care plan, that is directly created in an eligible business..."
That seems reasonable but the unfortunate side of things is that only 59% of businesses in Washington with between 2-9 employees offer health insurance. Only 73% of businesses with between 10-24 employees offer health insurance.
This B&O tax credit certainly won't harm economic growth, and the idea behind it is solid (if somewhat overly optimistic). However, cutting off almost 40% of the very small business firms in the state from this benefit because they do not offer health insurance to their employees artificially curtails job growth that could have taken place based solely on the tax credit.
Some of the small firms simply are unable to afford the cost of health insurance and this tax break could have helped them rectify that situation.
