NASE in the News

Washington, D.C., January 23, 2012 – As the President prepares to deliver his annual State of the Union address and Members of Congress prepare their talking points in response, the nation’s self-employed are looking for action, not just more words. With the economy showing signs of life, the 22 million Americans who are self-employed must not be forgotten in the back and forth over big policy changes. 

While the self-employed struggle with a disproportionate tax burden, they are also trying to drive economic growth by building their businesses. With small and micro-businesses responsible for a significant part of economic growth in the U.S., the policy and regulatory changes required to help this sector are vital to broader national economic improvements. 

“With all of the recent talk about jobs from energy production, pipelines or other big business, the jobs pipeline that we’re not talking about – the self-employed – is often forgotten,” explained Kristie L. Arslan, president and CEO of the NASE. “The President and Congress must check off the items on the Self-Employed Agenda if they want to ensure continued economic growth.”

The Self-Employed Agenda for 2012 includes action on several initiatives that will help level the playing field for the self-employed sector and help spur broader economic gains nationally:

• Self-Employed Health Insurance Deduction: The payments that small-business owners make for health insurance premiums for themselves and their families won’t be as tax beneficial for 2011 tax returns as they were for 2010.  The premiums paid for health insurance by the small-business owner will be still be deductible on page one of form 1040, but unlike 2010, those same premiums will not be included on Schedule SE, Self Employment Tax. That means net earnings from self employment will be higher and the related Self Employment Tax will be higher. This is in effect a 15.3% tax hike on the small-business owner. The self-employed need this deduction extended or made permanent to avoid the dramatic increase in tax burden that will otherwise take effect. 
• Payroll Tax Relief Extension: The payroll tax cut for 2011 expires at the end of February 2012. Small and micro-businesses need this cut to be extended for the full year to ensure they can continue to grow and contribute to overall economic improvement. 
• Standard Home Office Deduction: Entrepreneurs managing their business out of their home face added burdens at tax time. Bipartisan legislation has been introduced in Congress to allow business owners the option of a $1,500 standard deduction, but would not preclude taxpayers currently qualifying for the home office deduction from continuing to itemize their expenses should they choose. Congress should pass and the President should sign legislation simplifying the standard home office deduction.
• Tax Deduction for Startups: Passed as part of the Small Business Jobs Act of 2010, it allowed individuals to take a $10,000 deduction for start-ups in 2011. In 2012, the deduction will decrease to $5,000. Maintaining the current level for this deduction is vital to encouraging individuals to continue to start new companies and contribute to the growth of our economy. 
• Alternative Minimum Tax (AMT) Exemption: For tax year 2011, the AMT exemption for a married couple filing a joint return is $74,450, and $48,450 for single filers, representing a $2,000 and $1,000 increase, respectively. For tax year 2012, the AMT exemptions are currently scheduled to decrease to year 2000 levels to $45,000 for a married couple and only $33,750 for a single taxpayer. Small and micro-businesses need this exemption to remain at 2011 levels to ensure the self-employed are not unfairly singled out for higher taxes by this reduction in the exemption.