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home : opinions : columns November 20, 2014

10/1/2012 9:55:00 PM
Guest Column: Best, worst of times - a tale of 2 job creators
Special to the Courier

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 also would 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 earn only $1,200 in profit per employee, he will not only lose all profitability and 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 also will 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 of 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.

Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees. Visit his website at www.kyl.senate.gov or his YouTube channel at www.youtube.com/senjonkyl.

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Reader Comments

Posted: Friday, December 14, 2012
Article comment by: kate winter

This posting is marvelous and what a fantastic research that you have done. It has helped me a lot. thank you very much.Thank you for sharing I'm touched to be featured in your blog.It is extremely helpful for me.

Posted: Thursday, October 04, 2012
Article comment by: Ninety percent nonsense

I've stopped listening to this dinosaur since he's acknowledged he can't make statements intended to be factual.

Posted: Thursday, October 04, 2012
Article comment by: Drew Desmond

In a recession, the first thing to go and the last thing to return is jobs. Fact is, companies ("job creators") don't hire and never will hire until they NEED to!

All this talk about people being job creators is ridiculous! There is only one job creator in all of capitalism: DEMAND FOR GOODS AND SERVICES! Nothing else ever created a job and nothing else ever will!

One thing we all can be sure of is this: the so-called "job creators" cannot survive if they hire people to be charitable. Congress needs to find ways to increase the demand for goods and services. THAT and ONLY that will bring back jobs.

Posted: Wednesday, October 03, 2012
Article comment by: Jon Kyle

Is one of those politicians who graduated from being a lobbyist ( for SRP) to the House of Representatives and then into the Senate, just like Jeff Flake. He never was one for creating jobs except for himself. Never owned a business. Like most republicans, even though he grew up during Vietnam Nam, never felt the need to serve in the military.
He does have a good medical insurance plan though. It is paid for by the rest of us. Even so, he thinks the rest of us should not have access to care, unless we are very lucky. Very good to have him out of the senate though where he will collect a nice pension paid for by us again. The only problem is, we will be electing a clone( Jeff Flake) who will has promised to repeal Obamacare while receiving medical care for him and his family again, paid for by us.

Posted: Wednesday, October 03, 2012
Article comment by: Bruce can have a biz running each restaurant

And each would be a small biz. Better for liability purposes anyway. Probably most of Bruce's employees are part-time and not covered by his existing insurance. Mitchell can easily keep investing in his businesses and deduct that from income in a sole proprietorship or an S-corp. The notion that business expenses aren't deductible is silly. The penalty only applies if an employee receives a subsidy. In short, Obamacare may not be a good idea, but it makes no sense to misrepresent its provisions in discussions. Oh, if it matters, I'm one of those job creators.

Posted: Tuesday, October 02, 2012
Article comment by: Funny Stuff

Its pitiful and disgusting how politicians lie to make a point in their favor.
Watch Jon Stewart in the links below catching Kyl telling lies.
Liar, Liar pants on fire!! At least Stewart makes you laugh, takes the edge off.



Posted: Tuesday, October 02, 2012
Article comment by: Funny Stuff

Story sounds a bit contrived. Oh, he's a congressman, my bad.

Posted: Tuesday, October 02, 2012
Article comment by: M D

Here's the fallacies in Mr Kyl's contentions and responses from the peanut gallery.

1 . The fine or tax can be avoided by offering health insurance.

2. Why should his restaurant owners have a competitive advantage over those restaurants that provide health coverage?

3 Standards should be part of the guidelines for providing health insurance. What good is health insurance if the coverage is inadequate? Would you lower health department standards because the restaurant struggled meeting them and it cost them some operating capital,

4 Assuming that there is a demand for the services of the restaurant, if they go out of business, a capitalist will step in to fill the void.

5. The waiver that McDonald's got is temporary. When the insurance exchanges come into being there will be no need for the waivers

Posted: Tuesday, October 02, 2012
Article comment by: Hooty Hoo

@ Fairy Tales or Jobs: That's excellent. Coudn't have said it better myself: Mitt made payroll and Obama made speeches. Maybe Oprah outta run, she's got it all right?

Posted: Tuesday, October 02, 2012
Article comment by: Common Tater Did Not Go To Business School

Common Tater, business is competitive by nature. All cost can not be passed along to consumers. If I have to charge $5 for a hamburger to cover my cost of employees at what the government deems a fair wage, my guess is they will go to McDonalds for a cheaper meal. (McDonalds got a wavier on the Affordable Healthcare Act) With no customers, I go out of business.

It is nave to think all cost can be passed on to the consumer. Why do you think companies go out of business or bankrupt?

Posted: Tuesday, October 02, 2012
Article comment by: Bama Obama

A good business wouldn't provide health insurance, just give employees several hundy a month to buy their own. That's what I did. You want a good plan buy it, just like a car or a TV set. It's just a commodity like anything else.

Posted: Tuesday, October 02, 2012
Article comment by: Let's hear something better. Get the facts before you blow!

What a crock of made up stories. Remember the House and Senate pass the bills, the President only signs or veto's them. If you have something better, let's hear it or shut up.

Posted: Tuesday, October 02, 2012
Article comment by: Kyl: Complain, Whine & do Nada

Attack. Whine. Complain. Distract.

And hope no one notices that you haven't passed a single meaningful bill with your name on it, right Senator Kyl? That sums up Kyl's Senate tenure.

Posted: Tuesday, October 02, 2012
Article comment by: Obamacare Is A Fraud

Obamacare is being paid for by your taxes from Medicare and just wait til you liberals get "taxed" for not having any insurance. Another four years of this administration? Are you sure about that.

Posted: Tuesday, October 02, 2012
Article comment by: Commen Tater

A smart business person would cut unnecessary overhead costs and/or pass the higher rate of doing business to customers.

Posted: Tuesday, October 02, 2012
Article comment by: Hooty Hoo

My liberal pal keeps going on how Obamacare is all about insuring the folks, the poor included. He doesn't get it. What it really is is a tax. That's it. It has nothing to do with improving medical care, nothing to do with reducing medical costs of hospitalization (which is $100 billion more that Social Security and $200 billion more than the Defense budget) or drug costs. Nada. It's a tax mostly on small businesses and the evil rich, as Kyl points out. It will help the insurance companies maybe, and Big Hospital a lot. It will hurt the economy of course. Obama has no clue about the economy, he's already proven that to me beyond a shadow of a doubt.

Posted: Tuesday, October 02, 2012
Article comment by: honky brujo

Kyle, what a bunch of bull. I know both of the men you were writing about and guess what they are both racist, and bigots. They have told me continually how much they hate the fact we have a BLACK man in the WHITE house.

Posted: Tuesday, October 02, 2012
Article comment by: Fairy Tales Or Jobs

For those who do not understand a business makes a profit or folds, this story is truly a fantasy. If you want a job, you have two choices. Start your own business or work for someone else. Instead of listening to all the rhetoric of unfairness, try to comprehend employment will not improve until the policies of division are replaced with pro business ideas.

It is easy to require a business to be do this or that, it is not easy to lower the unemployment rate unless government policy creates an environment conducive to growth. It is really simple, but requires someone with the policies and experience to make it happen. Our choice is a community organizer or a successful businessman. One met a payroll while making a profit, the other offers fairy tales and hope.

Posted: Tuesday, October 02, 2012
Article comment by: Time out

"And although Bruce offers health-insurance coverage to all of his full-time employees, ObamaCare will declare his insurance plan not good enough..." So the only rational business decision he can make is to close down? What about looking for another insurance plan, look at ways of becoming more profitable and expanding his business? Kyl (and his Republican friends) makes this look like gloom and doom. Most of us who pay through the nose for health insurance are shouting "finally." Stop trying to repeal something that was a step forward, and start working together across the aisle for the American people for a change.

Posted: Tuesday, October 02, 2012
Article comment by: Kyl & McCain --Senators about Nothing

I'd like to see Kyl and McCain write a co-authored column discussing all of THEIR accomplishments in the Senate. Not another column about what is wrong with the Democrats, but one discussing their OWN accomplishments. It would be a miniature article. The only shorter article would be one discussing Republican accomplishments in the House of Representatives!
Can you think of a single piece of important legislation Kyl or McCain are responsible for in their long tenures? Just one? In what way has AZ benefited by having Kyl or McCain? They are a blank slate after all these years.

Posted: Tuesday, October 02, 2012
Article comment by: GOP all the way

Gee Dad, I know my time abroad and all those years of college might have set you back some money, but you've just got to understand, it's my dream to work in a restaurant for minimum wage. I feel it's my duty to work my behind off, with the faith that good luck will keep me healthy, secure in knowing that it hard times come, I'll always be able to work at some city owned golf course yada yada yada.
Sorry, don't have to look any further then the recent stories about Coyote Joe's and The Bird Cage to know I'll never take the advice of a retired politician.

Posted: Tuesday, October 02, 2012
Article comment by: Tom Steele

Once again we see the hidden details of what was called The Affordable Health Care Act. A thorough review will cause a thinking person to see the act is designed to force government run health care on America. With control of who can get a medical student loan to where in the country you can practice your trade to the elimination of private practices will be the result. ObamaCare as it is referred to must be replaced by a business plan to allow market forces and trial lawyer controls to reduce costs and really create an affordable health care system.

Posted: Tuesday, October 02, 2012
Article comment by: Chris Bergman

That sounds about right, Jon. Developing a system of government and taxation which relieves productive people of all of their wealth while relieving them of none of the responsibility is exactly what the elitists want.

Remember, this isn't about helping the poor, increasing opportunity for the common person or even getting healthcare to those who need it. It's about destroying those who dare to do their best and rise above the rest. Those who do are merely feeding a system bent on their own destruction. So long as people like those you mention, Jon, continue to struggle to produce within this system, they deserve what this system produces. bergman_blogs@yahoo.com

Posted: Tuesday, October 02, 2012
Article comment by: David Kerr

Remember the debate about Obamacare. It is not supposed to work. Its purpose is to create demand for single payer.
The most important aspect is the expansion of medicaid (AHCCS in Arizona). California will have an early extremely generous expansion of medicaid. Medicaid care is poorly compensated so doctors and hospitals will "cost shift" so everyone else's health care costs will rise to pay for Medicaid. Doctors will be moving to Arizona from California. We need them because of the aging population and growing population. Taxpayers will be leaving California for Arizona because Arizona will have lower healthcare costs.

Posted: Tuesday, October 02, 2012
Article comment by: Paula Gize

Right on Mr. Kyl. Obamacare is a fiasco.

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