Oct. 18—Thousands of healthcare jobs would have been lost if an Obama administration proposal to tighten the tax exemption for bonds used by not-for-profit hospitals had been in effect last year, a recent report concluded.
IHS Global Inc., a market analytics firm, concluded that a proposal included in President Barack Obama’s latest budget to cap the exemption on tax-exempt bond income at 28 percent would have cost 41,000 jobs, including more than 8,000 in “education and health services,” in 2012.
“Many of these induced jobs are in private hospitals and the offices of physicians, dentists, and health practitioners as employees seek out general healthcare services,” the report stated.
What’s at Stake
The report cited Thompson Reuters to note that tax-exempt bonds provided $450 billion in financing for not-for-profit organizations from 2003 to 2012, “largely sourced to health care and education projects.”
The job losses would stem from an average of $5.8 billion in additional annual interest expenses.
The annual job losses would accelerate in healthcare and education to 23,268 if the tax exemption were fully repealed, according to the study.
The federal debt-reduction plan produced by the 2010 National Commission on Fiscal Responsibility and Reform, known as Simpson-Bowles, recommended eliminating the tax exemption.
Hospital and education advocacy groups issued a joint statement soon after the president’s budget was released that highlighted the importance of the tax-exempt bonds to their organizations and highlighted some effects of restricting them.
“This type of bond financing for not-for-profits (primarily hospitals and higher education) is a proven tool with a decades-long record of success for providing vital public services and creating jobs,” the statement said.
The legislation reopening the federal government following the recent partial shutdown included a provision creating a new bicameral budget committee, which is set to make recommendations on tax and entitlement changes in December.
The IHS analysis was produced for the National Association of Health and Educational Facilities Finance Authorities, which is among the groups that voiced opposition to Obama’s proposal.
Publication Date: Friday, October 18, 2013