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home : opinion : columns April 24, 2015


10/14/2012 6:00:00 AM
Guest Column: Job creators face new challenge
Jon Kyl
U.S. Senator

Charles Dickens' A Tale of Two Cities famously begins: "It was the best of times, it was the worst of times..." Yet, for two Arizona business owners who recently visited my office, it can only be described as the worst of times. Not only are these job creators up against the headwinds of a weak economy, but costly mandates and tax hikes enacted by the president and his allies in Congress are poised to crush their businesses and force many of their employees into the unemployment queue.

Bruce owns three restaurants in the Flagstaff area. He is currently deciding whether or not to renew a franchise contract on the third restaurant. Moving forward with that renewal would not only maintain restaurant jobs, but would also create new construction jobs from the $600,000 he plans to invest in rebuilding the restaurant.

There is only one problem: ObamaCare would make a choice to move forward with the renewal the single worst business decision of his career.

Because of the additional employees in Bruce's third restaurant, he will no longer meet ObamaCare's definition of a small business. And although Bruce offers health-insurance coverage to all of his full-time employees, ObamaCare will declare his insurance plan not good enough, and Bruce will be fined $2,000 per employee.

Moreover, since his restaurants only earn $1,200 in profit per employee, he will not only lose all profitability but be $800 in the hole for each employee he maintains. The only rational business decision Bruce can make is to shed the third restaurant, which will unfortunately mean laid-off restaurant workers, fewer construction jobs, and community blight resulting from the newly vacant property.

The situation is no better for Mitchell, who owns 28 restaurants with about 500 employees. Mitchell's restaurants earn a profit of $2,000 per employee, or $1 million. That sounds like a lot of money, but Mitchell hasn't taken any cash for himself out of business profits for years - he leaves all of it invested in maintaining the restaurants. Regardless, ObamaCare will fine Mitchell $2,000 per employee, so he will lose every dime of profit - much of which he needs simply to pay the mortgage on his restaurant property.

But it doesn't end there. Because ObamaCare does not allow business owners to deduct these fines, the tax code will treat Mitchell as if he still had $1 million in business profit, even though he already turned over 100 percent of it (which he never had in cash) to Uncle Sam. As a result, he will also owe hundreds of thousands of dollars in income taxes on $1 million that does not exist.

And it gets worse. Because the president and his allies consider Mitchell to be one of those "millionaires" who "aren't paying their fair share," they want to raise Mitchell's tax rates again next year. In other words, turning over all his business profit and then paying hundreds of thousands of dollars in income taxes on phantom profits is not enough. For Mitchell, this arithmetic can only lead to bankruptcy and more senseless destruction of jobs.

Who loses in this scenario? Not only Bruce and Mitchell, but also the hundreds of workers and families who depend on those restaurants for their livelihoods. We have already experienced the 43rd consecutive month of unemployment above 8 percent. If we truly want our country to move forward, we must stop this war on job creators.

The first step in that process is to repeal ObamaCare, and I remain committed to doing so.


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Reader Comments

Posted: Saturday, October 27, 2012
Article comment by: Goodbye, Mr. Kyl, Enjoy the Pension We Supplied You

Mr Kyl, why not talk to us about the meeting you had with your fellow Republican leaders the night of Obama's inaugural where your gang pledged to do everything possible to obstruct President Obama. Please explain how that helped you be a job creator.

I am so glad Kyl will no longer represent me.


Posted: Monday, October 15, 2012
Article comment by: David Gaither

Quite often when people continuously point out other people's defects, it's an effort to hide their defects!

Many liberals make this same statement or ones similar. I believe this is because those are the ones that "drank the koolaid" presented to them in college. It's well known that colleges lean hard to the left and make it their goal to turn out many good little liberals! Most assuredly, they drank the koolaid in those useless social studies classes!


Posted: Monday, October 15, 2012
Article comment by: tj denton

anson says that no one with intelligence votes republican.

sure, there are some smart liberals, but they are book smart and have zero common sense. so have your grammar and pretentiousness anson, ill keep my problem solving skills and common sense any day of the week.


Posted: Sunday, October 14, 2012
Article comment by: nnp .....

any read of American history from about 1790 to the early 1800's shows that, without intrusive and expensive Government, the American people could become prosperous in just a few years, and the envy of the world (and seeing this from London, Mayer Rothchild did everything in his power to prevent the same thing happening in Britain - another story, finally duplicated in America after enough presidential assassinations, subterfuges, and outright massive thefts).

Posted: Sunday, October 14, 2012
Article comment by: marla Kiriakidis

Funny how Senator Kyle would deny insurance coverage to his constituents seeing how we are paying for his.

Posted: Sunday, October 14, 2012
Article comment by: harris stein

Won't John Kyl ever just go away? If he is so concerned about these restaurant owners, why doesn't he just go to their restaurants every night and eat dinner. I'm sure that unlike people like me on a fixed income he can afford it.

Posted: Sunday, October 14, 2012
Article comment by: Frank Lee Speaking

I hope Bruce closes the one restaurant mentioned. It will enable him to concentrate on the other two.

It will also provide a valuable lesson to any obama fans in the closed one to about how how capitalism works in the real world .
They can think about while on the unemployment line.

LOL


Posted: Sunday, October 14, 2012
Article comment by: Anson's Nephew

“The first step in that process is to repeal ObamaCare, and I remain committed to doing so.”

Yes, by all means Kyl (thank God he’ll soon be gone) eliminate the program that has reduced my prescription medicine costs, allowed for wellness checks, made certain my kids will not be denied health care for “pre-existing conditions” and many more benefits. And of course Kyl offers nothing to replace the AHCA – just the usual blather from these Republican fools.

Remember, no one with a modicum of intelligence ever votes for a Republican.


Posted: Sunday, October 14, 2012
Article comment by: J J

Wow. Jon Kyl must have flunked accounting.

Those numbers are misleading because Jon mentions profit per employee at $1200 and fines per employee at $2000 but he never mentions if its per year, month, two weeks or weekly.

I'm betting the profit per employee is at least per month, as that would mean $60000 profit per month on 50 employees. Considering the average private pizza shop can do 25k a month in sale, it's not hard to imagine his three restaurants can do much better.

Now, the fine isn't a pay period or monthly fine, it's annual. So if each employee makes him $1200 per month that's only 14400 per year, which means he isn't even making enough off of each to cover minimum wage. That brings us back to the profit issue. No business can make less per employee than they pay, so we likely are looking at $1200 per week per employee. That's $62400 per year. That $2000 fine doesn't sound so terrible now, does it?

Jon Kyl - Failing simple accounting for America.


Posted: Sunday, October 14, 2012
Article comment by: anonymous anonymous

Yes them job creators do have big issues especially since their two great white hopes have so much baggage to carry into Nov!

http://www.huffingtonpost.com/2012/10/12/paul-ryan-stimulus-funds_n_1962163.html?utm_hp_ref=politics




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