Legislative Democrats just don’t get it — that jobs do not grow on trees, are actually created through innovation and the free market. Companies generally are not started for altruistic purposes, rather to make a profit. When the profit shrinks, the business shrinks, or disappears. So the Democrat propostion to throw a massive tax at California businesses is only going to make things worse, not better, as it will result to a rise in unemployment in the Golden State.
Yesterday, Democrats did just that, and they voted to move forward with a tax scheme to try to grow the state treasury to pay for massive new healthcare entitlements.
Lorraine Salazar is co-owner of Sal’s Mexican Restaurants in Selma, Fresno and Madera. Just taking her business as an anecdotal case on the impacts of AB 8 foreshadows many, many, many similar (or worse) situations…
My father, an immigrant, opened his little taco shop during the summer of 1942 and it has now flourished to become three successful Mexican restaurants in Selma, Fresno and Madera. He has passed on, but if he were here he would be frustrated over government legislation that makes small businesses the victims of well-intentioned legislation.
I am the second generation co-owner of these restaurants that employ 150 people. The average small independent restaurant employs a large workforce and operates on a very tight margin. We often make only 5 cents on the dollar before taxes — we are lucky if we have a few pennies left after taxes.
Assembly 8, by Speaker Nunez, would require a costly employer mandate, imposing a 7.5% payroll tax that can be raised at any time to keep pace with rising health care costs. My health care insurance just went up 14%, so realistically how long will the 7.5% stay at that level, especially if part of the money is allocated for additional subsidies.
Providing health insurance for many small businesses is the difference between being in business or in another line of work. The world is not divided into “good” employers who provide health care and “bad” employers who do not provide health care, but those who can afford to provide coverage and those that cannot.
Currently, we can only afford to provide health insurance for our management team. We spend $63,000 annually on health care for 10 people, plus their dependents. A 7.5% payroll tax would require me to spend an additional $158,000 annually, which I cannot afford.
Coupled with the recent minimum wage increase, this will force me to raise my prices and even with a projected 10% sales growth we would need to shut down one restaurant. This would mean that I would have to tell 35 people that they no longer have jobs. All of this would be due to well-intentioned legislation that negatively impacts hard working Californians and their families.
The other ramification is that I will have to tell my family that we may not have a thriving business to pass on. My son and his cousins would be the 3rd generation to run Sal’s Mexican Restaurants and I would like them to be able to continue serving our loyal patrons for at least another 65 years.
What many people fail to realize is that an employer mandate requires the greatest sacrifice from businesses that are least able to pay and their employees who are the most vulnerable. I urge decision-makers to examine the real world implications of AB 8 as they consider their vote.
Care to read comments, or make your own about today’s Daily Commentary?
Just click here to go to the FR Weblog, where this Commentary has its own blog post, and where you can read and make comments.