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House Members Work for Tax Fairness for Self-Employed

March 18, 2009
Press Release

WASHINGTON, DC – U.S. Reps. Ron Kind (D-WI), Wally Herger (R-CA), Suzanne Kosmas (D-FL), and Dave Reichert (R-WA) introduced legislation to address an unfair tax on health insurance premiums for the self-employed. 

Under current tax code, corporations can deduct the cost of health insurance premiums as a business expense and forego payroll (FICA) taxes on these costs.  Self-employed workers, however, cannot take the same deduction and have to pay an additional 15.3 percent tax on those premiums. While health insurance costs are a major concern of all employers, this tax provision unfairly forces the self-employed to pay an extra $1,850 annually.

“In a tax code as complicated as our own, we need to make sure that all taxpayers are treated fairly. Unfortunately, under current tax law, the self-employed aren’t allowed to take the same deductions on health care premiums as other businesses,” Rep. Kind said. “We need to fix this disparity to make health insurance more affordable for our nation’s entrepreneurs, including the over 300,000 sole proprietors who do business in Wisconsin.”

“The United States is on the verge of a health care crisis, millions of people are without insurance because of rising health care costs, and we need to rise above partisanship to overcome these obstacles,” said Rep. Herger. “The Equity for Our Nations Self-Employed Act would correct part of the problem by helping to level the playing field in healthcare costs.  It’s patently unfair that sole proprietors, a vital part of job creation and our economy, are penalized with additional taxes because they are not granted the write offs that larger businesses receive.  Our legislation would correct this inequity and help make health insurance more affordable for millions of Americans.”

“It is absolutely unfair that the self-employed are forced to pay an extra tax on their health insurance premiums,” said Rep. Kosmas.  “Our bipartisan legislation will fix this inequity and lower health care costs for over one million Floridians.  Rising health insurance costs are a burden to small businesses and families across Central Florida, and I am pleased to sponsor bipartisan, common-sense legislation that addresses this critical issue while helping self-employed small business owners during these difficult economic times.”

“As we look for solutions to ease the burden of skyrocketing health care costs for small businesses and families, this legislation is one step in the right direction to help those who are self-employed,” said Rep. Reichert. “It levels the playing field for our country's job creators at a critical time when our economy is struggling, small businesses are struggling, and families are more worried about the cost of health insurance.”

“This minor, very doable correction of the tax code will make it easier for the 21 million self-employed small-business owners in the U.S. to afford quality health insurance," National Small Business Association President Todd McCracken said.

“America’s job creators – small business owners – ought to have equal tax treatment for the purchase of their healthcare. The nations self-employed don't have that equality today.  This bipartisan legislation aims to correct that inequity so that entrepreneurs have more affordable healthcare options,” said Susan Eckerly, Senior Vice President of Federal Public Policy for the National Federation of Independent Business. “We look forward to working with Congressman Kind, Herger, Kosmas and Reichert to provide this long overdue tax equity to the self-employed.”

“More than half of our members believe the current health care system is not meeting their needs or those of their families,” said National Association of Realtors President Charles McMillan.  “Reform of our nation’s health care insurance system for the self-employed is a top NAR priority. On behalf of Realtors® across the country, we enthusiastically support and thank Congressman Kind, Herger, Kosmas and Reichert for championing health care tax reform that will equalize the tax treatment of health insurance premiums for the self-employed with those currently available to other businesses. Additionally, this will help make health care insurance more affordable for our members and for other independent contractors.”

"We ought to be encouraging sole proprietors, not penalizing them. Yet the tax code currently does just that," said R. Michael Beene, Senior Health Policy Expert and General Counsel for the National Association for the Self-Employed. "This bill puts the self-employed on equal footing with other American businesses, addresses an area that has too many uninsured individuals and families and rights a wrong at a time when we most need it. On behalf of the NASE and its 200,000 members we offer our full support."