On Sept. 25, the Equity for Our Nation's Self-Employed Act of 2007 (H.R. 3660) was introduced in the House. This bill would allow the self employed to deduct any health-care costs from their payroll taxes. NFIB strongly supports this legislation. The Senate is also expected to introduce similar, bipartisan legislation later this year.
The "self-employment tax":
- Current law allows corporations to deduct 100% of the cost of employer provided health care from their income and FICA taxes.
- The self employed are unable to take this deduction and, as a result, pay an additional 15.3 percent tax on their premiums.
- By allowing the deduction of all health care costs from self-employment taxes, small-business owners would reduce their tax burdens by 15 percent.
- The current lack of deductibility means that small-business owners pay higher taxes simply because they work for themselves and not for big corporations.
Who will benefit from H.R. 3660?
- The term "self employed" includes sole proprietors, partners in partnerships, LLC members and S corporation shareholders who own more than 2 percent of the company's stock.
- In 2005, of the more than 16 million self-employed individuals, 3.9 million paid self-employment taxes on their health insurance premiums.
- 60 percent of Americans without health insurance (24 million) are from families with a head of household that is self employed or works for a small business.
- According to a 2005 survey, 51 percent of these businesses do not offer – nor plan to offer – health insurance because of the high cost.
Why does NFIB support H.R. 3660?
- Equal tax treatment for the purchase of health care is critical to achieving the portability in health insurance that can transform today's employee into tomorrow's entrepreneur.
- In the 2007 NFIB Survey on Health Care, 80% of NFIB members expressed support for equalizing the tax benefits for the purchase of health insurance between those who have employer-sponsored health insurance and those who purchase health insurance individually.
NFIB action
- NFIB is a member of the Supporting Equity for Our Nation's Self-Employed coalition.
- The coalition is a group of small business and trade organizations that feel strongly that the self-employed deserve a fair and level playing field in order to start up, grow and be successful in their business.
- NFIB will continue to work with key congressional offices to push H.R. 3660 through the House.
