Bill Aims to Level Tax Playing Field for Self-Employed
Small Business Groups Applaud Introduction of the Equity for Our Nation’s Self-Employed Act

Washington, D.C. – The Coalition Supporting Equity for Our Nation’s Self-Employed, which represents small business groups across the nation, applauds the introduction of H.R. 1509, a bill that would eliminate an inequity in the tax code that requires millions of self-employed individuals to pay an additional 15.3 percent in payroll taxes on the cost of their health insurance premiums.

Introduced by Representatives Wally Herger (R-CA), Ron Kind (D-WI), Suzanne M. Kosmas (D-Fla.) and David G. Reichert (R-WA), the bill allows sole proprietors to deduct the cost of health insurance premiums as a business expense when calculating their self-employment tax. Currently, all business entities except sole proprietors deduct their health premiums as a business expense and forego FICA (Social Security and Medicare) taxes on these expenses. This leaves over 20 million self-employed entrepreneurs facing additional taxes on health costs.

“With the economy in a lull, more people than ever are turning to self-employment, yet the current tax code continues to weigh-down these businesses,” said Kristie Arslan, co-chair of the coalition. “Congress should act now to pass the Equity for Our Nation’s Self-Employed Act and give sole proprietors the fair shake they deserve.”

In addition to addressing a significant tax inequity, H.R. 1509 would remove strong cost penalties imposed on the self-employed purchasing health insurance. According to the Kaiser Family Foundation, the self-employed pay on average $12,106 per year for family health coverage. Come tax season, since that expense is not deductible when calculating self-employment tax, they pay $1,852.22 more to the federal government in payroll tax on these premiums. No other business entity must pay this added cost.

“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.

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