Ala. Gov. Pumps up Small Businesses

Gov. Bob Riley visited a Montgomery, Ala. dry cleaners on Monday to promote his plan that would provide a tax incentive for small businesses to offer health insurance for their employees.

At Dry-Cleaning Express in Montgomery, Governor Riley discussed the idea with owner Matt Hall and some of his 18 employees.

“This is a smart way to address three problems,” said Governor Riley. “We can make health care more affordable, lower the number of Alabamians who lack health insurance, and at the same time, we can strengthen our economy by helping our small businesses.”

Additional economic growth, the Governor points out, results in additional funding for education.

“If someone says this hurts education, they are flat-out wrong,” Governor Riley said. “The only reason we’ve been able to increase education funding in Alabama by more than $2 billion is because we have a growing economy. So, if we want to continue increasing education funding, we’ve got to take steps like this that not only help people, they help our small businesses succeed.”

Riley’s proposal would help small employers with 25 or fewer employees to access affordable health insurance. The proposal would allow small employers to deduct twice the amount they pay for health insurance premiums from their state income taxes. Small business employees with incomes of up to $50,000 would be also able to deduct the twice the amount they pay for health insurance from their individual income taxes.

Employers with 25 or fewer employees represent 90 percent of all businesses in Alabama.

Riley’s proposal also prevents revenue loss to the Education Trust Fund. Since it is phased in over a five-year period, each year’s tax incentive does not go into effect until three percent estimated growth in the ETF has been certified by the Department of Finance. If approved by the Legislature, the tax incentive would take effect Jan. 1, 2008.