U.S. Chamber says health care law hammers small businesses in an attack on Betsy Markey, D-Colo.

The U.S. Chamber of Commerce is attacking Betsy Markey, a Colorado House member running for re-election, for supporting major Democratic initiatives. But in making its criticism, the chamber distorts key parts of the proposals.

"Colorado is facing economic disaster," the ad says. "We told Betsy Markey we needed jobs. Why didn't she listen? Markey fought for the Obama-Pelosi government take over of health care, crushing small businesses with billions in penalties. Now Markey wants a national energy tax, costing families nearly $2,000 a year. Call Betsy Markey, tell her to listen. Tell her to stop supporting Pelosi and making the economy worse."

Markey did vote for the new health care law, a major overhaul of health care regulations, as well as a cap-and-trade law intended to curb carbon emissions and address climate change. But the ad's descriptions of those measures are deceptive.

For example, Markey does not favor a national energy tax. She did support a cap-and-trade proposal that limits carbon emissions of polluters by requiring them to buy permits. Companies would more than likely pass on their costs to consumers, but it wouldn't cost nearly $2,000. Nonpartisan agencies estimate it would cost families between $80 and $340 a year, depending on income. We wrote a detailed analysis last year when Sen. Lamar Alexander, R-Tenn., said that the Obama administration's cap-and-trade plan would create "a $1,761 yearly energy tax." We rated the statement False. The $1,761 number was a figure created and promoted by a conservative blogger.

Here, we're looking at the ad's claim that the Democratic health care law crushes small businesses "with billions in penalties."

We found this claim perplexing, because small businesses can actually qualify for tax credits under the new health care law.

Generally speaking, tax credits are available to employers with fewer than 25 employees who are paid average annual wages of less than $50,000. If the employer pays for at least half of the insurance for workers, the employer gets a tax credit for part of the contributions. Those tax credits start for the 2010 tax year, and they increase in 2014 when more provisions of the health care law take effect.

During the debate leading up to the health care law, members of Congress considered -- but ultimately rejected -- a straightfoward mandate requiring employers to offer health care to workers and imposing penalties if they didn't. Instead, they came up with a complicated fine for large employers. Starting in 2014, large employers who don't offer health care face a fine, but only if their workers qualify for tax credits from the government to buy health care. It's likely that most large employers who don't offer insurance will have to pay the fine.

But again, small employers -- those with 50 employees or fewer -- are exempt from the fine.

Still, that's the provision the Chamber pointed to when we asked them for evidence for the claim in the ad. The nonpartisan Congressional Budget Office estimated the fines would come to $52 billion over 10 years.

We should note that there's a lot of political mischief to be had around the term "small business." Pollsters tell us that Americans have very positive opinions of small businesses, but people often have different ideas of what size a small business is.

In a similar vein, Republicans have made the case this year that most of the wealthiest Americans are actually small business owners, but that's a dubious claim. We looked into a statement to that effect earlier this year and rated it Barely True. And the health care law does impose some new taxes on the wealthiest Americans: It imposes a 3.8 percent tax on the investment income of couples who make more than $250,000 or individuals who make more than $200,000.

The Chamber argued that businesses can have more than 50 employees and still be considered small businesses. Spokesman J.P Fielder pointed to regulations from the Small Business Administration that consider a small business to be anyone with 500 or fewer employees.

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And it's true that generally speaking, the Small Business Administration does consider a small business to be a firm with 500 employees or less. But there are exceptions for that, depending on the industry. For example, a manufacturing firm with 500 employees is probably a small manufacturer, but an accounting firm with 500 employees is relatively large, said spokesman Hayley Matz. In some cases, the small business designation is determined by the firm's revenues, not the number of employees.

We also looked at research the Small Business Administration compiles using data from the U.S. Census. Their research shows that the vast majority of businesses in the United States have fewer than 50 employees. In 2007, 5,814,584 firms had fewer than 50 employees, compared with a total just over 6,049,655 firms. In other words, 96 percent of U.S. small businesses are specifically exempted from fines on employers who don't insure their employees.

The Chamber's ad said that the new health care law crushes small businesses "with billions in penalties." But some small businesses will actually get tax credits from the health care law. Meanwhile, almost all small businesses -- those with fewer than 50 employees -- are exempt from penalties, whether they offer insurance or not. Some small businesses are larger than 50 employees and could face fines if they don't offer employees insurance. But a vast majority of U.S. firms are smaller than 50 employees and are exempt from the health insurance requirements. The chamber's ad is sweeping, and doesn't account for any of the positive provisions that don't "crush" small business but actually help them. So we rate the Chamber's statement False.