The Affordable care act negatively impacts small businesses' tax Essay

The Affordable care act negatively impacts small businesses' tax liability and their ability to expand and hire new employees - Essay Example The act intends to offer all citizens of America a health insurance policy that can be easily affordable. This is in line with the main goal of achieving better health care in the United States. Employer is required to sign and implement the new act. This is supposed to affect companies with 50 or more staff members. The staffs are supposed to be given the health insurance. Failure to adhere to the new rules will see companies getting stiffer penalties. The act comes as a reprieve to the employees but serious issues still arise on the side of employers (Tammy, 2013). These challenges that have led to the delayed implementation of the act include:- 2. Tax Liability. Employers with the threshold of 50 or more staff are legally required to give health coverage to their staff. Failure to adhere to this they are to pay tax penalty which will increase annually. Estimates indicate that in 2014, the penalty will amount to $47.50 per child and $95 per adult or 1 percent of the household income that is taxable. In 2015, the penalty will be $ 162.50 per child and $ 325 per adult or 2 percent of household income that is taxable. In 2016, the penalty will amount to $347.50 per child and $695per adult or 2.5 percent of household income that is taxable. In each case, whichever option is highest will be considered. After 2016, there will be an increase annually in the penalty centered on the increase in living cost (Tammy, 2013). The penalties impacts negatively on small business that might be forced to go through severe losses and even shutdown. 3. Hiring. Research indicate that there will be a less of approximately two million people employed on full time basis in 2017 as compared to the number working in the nonexistence of the new law. Big and small companies are likely to reduce the rate of hiring, the small companies being the most affected. ACA can hasten the deterioration in employment in small business by reducing both the need of