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Washington Watch - March 9, 2011

Wednesday, March 09, 2011

Bipartisan Effort For Tax Fairness For Self-Employed Introduced In House

A longtime priority of the National Association for the Self-Employed (NASE) has been introduced in the House. U.S. Reps. Wally Herger (R-Calif.) and Ron Kind (D-Wis.) have re-introduced legislation (H.R. 880) to address an unfair tax on health insurance premiums for the self-employed.  Under the current tax code, corporations can deduct the cost of health insurance premiums as a business expense and forego payroll (FICA) taxes on these costs.  Last year Congress passed legislation allowing the self-employed to fully deduct their health coverage costs from their 2010 taxes.

This provides an important tax break for the over 23 million self-employed Americans that represent 78 percent of all small businesses in the U.S. It is estimated that the new one-year tax deduction on health costs for payroll tax purposes will save self-employed business owners anywhere from $450 to nearly $1000 on their 2010 tax returns.  This deduction only applies to the 2010 tax year and without action the self-employed can expect to see their taxes go up by an average of 15%. The Herger-Kind legislation would permanently eliminate this inequality in our tax code.

Read more here.


NASE Praises House Repeal of 1099 Provision

Kristie Arslan, Executive Director of the NASE, released the following statement after the House passed a repeal of the onerous 1099 legislation:

“The NASE is pleased to see that the House has supported the permanent removal of this law from the backs of the self-employed. Not only does the increased reporting discriminate against small enterprises who do not have the luxury of having an accounting department on staff, it causes needless double-reporting of business credit card transactions for goods and services. The Senate needs to act now to do away with this troublesome law once and for all.”


Tax Day: Let's Make the Tax Code Fair (Huffington Post)

By Kristie Arslan, NASE Executive Director

It is a sad, but true fact: health insurance is a luxury item for many small business owners, purchased when times are good and forsaken when times are lean. This is especially true for self-employed and micro-businesses -- our nation's smallest businesses. Thanks to a minor quirk in the tax code that has a major effect on their bottom lines, the self-employed are the only business entities that receive no tax benefit for purchasing coverage. Every other type of business, like corporations and partnerships, can write off the cost of health insurance as a business expense.

Congress delivered a temporary reprieve of this historic oversight in the form of the self-employed health care tax deduction included in the passage of last fall's Small Business Jobs Act. For the 2010 tax year, self-employed business owners are able to deduct the cost of their health care coverage, which will put about 15% of their premium back in their pocket. For the average self-employed business owner, the temporary deduction amounts to about $2,000.

Read the entire Huffington Post article here.


Washington Watch Online

Visit NASE Advocacy to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business.