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Papa John's franchise owner says Obamacare may force job cuts

By Marilyn Tennissen | Jul 30, 2012


BEAUMONT - Papa John's pizza restaurant owner Judy Nichols' plan to expand her business in Southeast Texas with a fourth location is on hold because of uncertainty over the impact "Obamacare" will have on her operations.

"I want to open a new restaurant, but without knowing how Obamacare will affect me, I can't make plans," Nichols said at a recent community forum in Beaumont on the new Patient Protection and Affordable Health Care Act.

Nichols had already purchased property and had blueprints drawn to begin building, but is shelving plans for now saying she has no idea how to budget for the federal mandate.

Small business owners like Nichols have been studying their options since the U.S. Supreme Court ruled that one of the plan's most controversial elements - the individual mandate -- was constitutional.

The mandate, which the high court determined was a tax, requires individuals to purchase medical insurance or pay a penalty. Companies employing 50 or more people but which do not offer health insurance will have to pay a tax of $2,000 per employee.

Nichols currently has 85 employees and has a private carrier insurance plan in place. Each employee pays $90 per month, and Nichols matches that with $90 to cover the whole premium.

"That's the cost if I continue to provide insurance. So I have two options, I can stop offering coverage and pay the $2,000 fine, or I could keep my number of staff under 50 so the mandate doesn't apply.

"I want to grow and hire more people, but Obamacare is making me think about cutting jobs instead," Nichols said.

Nichols has been in the restaurant business for more than three decades and owned Papa John's restaurants for 17 years.

"That's 33 years of producing jobs for young adults. Tens of thousands of kids have been sent to college, families have been started and careers have begun," she said. "Now, a long and productive career is about to be destroyed by slavery instead of being rewarded with retirement."

Nichols said she knows using the term "slavery" may raise some eyebrows.

"But don't forget the definition of slavery. The definition of slavery is that the rewards for your work and sacrifices are not yours to claim," she said.

She provided the following breakdown to illustrate her point.

In 2011, her business income was $36,627.

Then Nichols paid $3,875, or 10.59 percent, for federal income tax. Another $14,048, or 38.35 percent of her income, went to state franchise tax; and $14,122, or 38.56 percent, was paid to the county for property taxes.

That comes to a total of $32,045, or 87.49 percent of her income, she had to pay on the "Big Three" taxes (federal income, state franchise tax, property tax) alone, she said. After those taxes were paid, she was left with $4,582 income.

"Now add to that sales tax, phone tax, trash tax, water tax, gasoline tax, payroll tax and other taxes ad naseum," she said.

In the end, Nichols said she feels as though she is paying the government for the "privilege to work."

"We are economic slaves already!" Nichols said. "Where is the money for PPACA supposed to come from?"

As the PPACA stands written today, Nichols said she would pay a minimum $20,000 to $30,000 in additional taxes.

"That's 55 to 82 percent of last year's profits. Do you really think I can make people pay $20 for a large pepperoni pizza?" she said.

Nichols said that if she cuts 10 to 15 jobs she would not have to worry about the penalty.

"But, I would pay an additional $100,000 to $140,000 if I moved forward with another unit (restaurant) as I had planned with the addition of PPACA taxes!"

She said the land for the new pizza place has been purchased and is sitting idle until she gets more information about the health care act and decides what to do.

The new restaurant would add construction jobs and 50 to 75 entry-level jobs in the low-income 77701 and 77705 zip codes as well as seven management career positions, Nichols said.

"That is over 80 young adults gainfully employed and producing economic activity in the East Side of town where we need starter jobs the most. Gone. Killed by PPACA."

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