[Congressional Record Volume 140, Number 140 (Friday, September 30, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          HEALTH INSURANCE TAX DEDUCTION FOR THE SELF-EMPLOYED

  Mr. McCAIN. Mr. President, I rise today to raise a major concern for 
small business throughout this country, the expiration of the 25-
percent tax deduction for individuals who are self-employed and their 
dependents and employees. This deduction, which was first contained in 
the Tax Reform Act of 1986, expired last year. Since 1989, we have been 
keeping small business in limbo each year while Congress decides 
whether to extend this deduction.
  Throughout the health reform debate, I have argued that this 
deduction for self-employed individuals should be expanded to be 
comparable to the full deduction that other businesses are entitled to. 
Ironically, not only are we failing to provide equity to these self-
employed individuals, but we are allowing their small tax benefit to be 
eliminated. If we do not pass an extension very soon, self-employed 
individuals will not be able to deduct their health insurance this 
year.
  One of my constituents has gone as far as alleging that small 
businesses are being punished for opposing the health reform bills 
proposed by the administration. Another has claimed that by allowing 
the tax deduction to expire, those who favor the various universal 
coverage bills, such as the Clinton and single-payor plans, are 
encouraging individuals to drop their coverage, thereby increasing the 
number of uninsured Americans and creating greater political pressure 
for passage of their plan next year.
  I disagree with these allegations. I would never attribute such 
objectionable motives to any of my colleagues. I believe that we all 
want to increase the number of Americans who have adequate health 
insurance coverage, though we differ on how best to achieve this goal. 
I do agree, however, that the result of allowing the deduction to 
expire will be to increase the number of uninsured Americans. I also 
agree that this is extremely unfair and will impose a large burden on 
individuals we should be helping, those who have taken the initiative 
and risk associated with small business and self-employment.
  What is happening here is another excellent example from the health 
reform debate of the perfect being the enemy of the good. Many of us 
have proposed full deductibility of health insurance for the self-
employed in our various health reform bills. The vast majority of us at 
least favor that these individuals not lose their current small tax 
benefit which helps them to purchase coverage. However, because we 
cannot have everything that we want, we are not willing to pass a bill 
that we all can agree on.
  Mr. President, we must pass an extension of the health insurance tax 
deduction for the self-employed this year. The many small businesses 
that will be harmed if we do not extend it are among the most vital and 
important participants in our economy. It is outrageous that they are 
not permitted to deduct the same percentage of their health insurance 
costs as do large corporations. It is even more outrageous that we are 
taking away the small amount that we currently allow them to deduct.
  If we are serious about expanding health insurance coverage in this 
country, we cannot allow this tax deduction to lapse.

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