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Mixed response to health care tax breaks

TAX CUT AIMED AT SMALL BUSINESS 'People know this means money in their pockets,' according to Small Business Administration head Karen Mills. TAX CUT AIMED AT SMALL BUSINESS
"People know this means money in their pockets," according to Small Business Administration head Karen Mills.
By Ricardo Alonso-Zaldivar
Associated Press / May 18, 2010

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WASHINGTON — The Obama administration yesterday unveiled a tax cut for small companies that provide health insurance, but business groups gave it a mixed review.

Even if it amounts to free money, many small businesses won’t qualify for the tax credit.

The full benefit goes to companies that have 10 or fewer workers with average salaries of $25,000 or less. They can get Uncle Sam to pick up 35 percent of their premiums. But sole proprietors aren’t eligible. And neither are firms with 25 or more employees, or average wages of $50,000 and above.

“We’re thinking mom-and-pop shops with one or two employees,’’ said James Gelfand, the US Chamber of Commerce’s health policy director. “For some businesses this will be helpful, but for many it will not be helpful. You have to be so small that it will be difficult.’’

Administration officials said they’re trying to target assistance to those who need it most. “The number-one concern of small businesses is access to affordable health care,’’ said Small Business Administration head Karen Mills, noting that only about half of businesses with 3 to 10 employees offer coverage. “People know this means money in their pockets,’’ Mills added.

The major expansion of coverage under President Obama’s health care overhaul law isn’t slated to happen until 2014. Congress included the small-business tax credit as an immediate benefit partly in recognition of the political clout of small business.