[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                  DEDUCTION FOR HEALTH CARE INSURANCE

  Mr. DORGAN. Madam President, I wanted to make a couple observations 
on this subject that has just been discussed, but I came to the floor 
really to discuss a colloquy that is being put in the Record between 
myself and Senator Moynihan.
  One of the issues that is left unresolved in this Congress is the tax 
deduction for health insurance costs for sole proprietors and other 
self-employed individuals in this country. Until last year, they were 
allowed to deduct 25 percent of their health insurance costs. Yet, 
across the street an incorporated business can deduct 100 percent of 
their health costs. In fact, the 25 percent deduction for the self-
employed expired December 31, 1993, and must be extended. In my 
judgment, it must be increased to 100 percent.
  Fairness would dictate that for every farmer, rancher, and self-
employed small business owner in America be allowed to deduct 100 
percent of their health costs just as large corporations are now 
allowed to do. To do otherwise, is a disincentive for them to acquire 
health coverage and is moving us in exactly the wrong direction.
  This Congress will not have extended the 25-percent health insurance 
tax deduction. The chairman of the Finance Committee has indicated, in 
a colloquy that will be in the Record, the following. He said:

       I intend to work expeditiously next year to bring 
     legislation to the Senate floor that would extend, on a 
     retroactive basis, the 25-percent health insurance tax 
     deduction that expired on December 31, 1993. In other words, 
     I intend to make sure that the legislation reaches back to 
     protect the deduction for all of 1993.

  He continued:

       We have been working to solve the tax inequity for self-
     employed individuals for many years. The Finance Committee 
     passed a bill in July of this year that would have raised the 
     deduction from 25 percent to 100 percent of the health 
     insurance costs of the self-employed. That continues to be my 
     goal.

  The chairman of the Finance Committee continues to say:

       Early next year I will work to reinstate the 25-percent 
     deduction as a starting point to getting the full deduction 
     for these costs.

  ``I consider this an urgent priority,'' he said. And he says ``I want 
Senator Dorgan to know that I support the 25-percent deduction and 
support expanding it to 100 percent.''
  The reason this is important to say at this point is as Congress 
adjourns without extending this, small businesses should know, farmers 
should know, and self-employed individuals should know that the 
Congress will, in my judgment, and will at least by the commitment of 
the chairman of the Senate Finance Committee, extend the 25-percent 
health insurance tax deduction retroactively back to January 1, 1994.
  We need to do much more than that. This needs to be a 100-percent 
deduction. A health insurance deduction for the self-employed should be 
identical to the health insurance deduction for the incorporated 
businesses in this country and this must be a priority.
  This is not some idle issue or unimportant issue. This is an issue 
about health care coverage for farmers and unincorporated businesses 
and the current disincentive for them to have that coverage; and we 
must not only extend the 25 percent, we must extend that to 100 percent 
permanently.


 restoring the 25-percent health insurance tax deduction for the self-
                                employed

  Mr. DORGAN. Madam President, I would like to make a statement and ask 
the distinguished chairman of the Finance Committee a question 
regarding the 25-percent tax deduction for the health insurance costs 
of the self-employed.
  I believe that saving and expanding the 25-percent deduction is 
critical to small business owners who conduct their businesses as sole 
proprietors. Their competitors, who are organized as C corporations, 
are still able to take advantage of full, 100 percent deductibility of 
these same health expenditures.
  The health of a farm family or small business owner is no less 
important than the health of the president of a large corporation, and 
the Internal Revenue Code should reflect this simple fact. We cannot 
afford to wait while Washington debates broader health care reform to 
save this provision.
  The outcry from small businesses will be deafening next April unless 
we move quickly next year to extend this provision. It is indefensible 
that our tax laws tell some businesses that they can deduct 100 percent 
of their health costs, while others, mostly smaller businesses, are 
told they can deduct none of their health care costs.
  Madam President, my question to the distinguished chairman of the 
Finance Committee is: Are you prepared to work quickly next year to 
reinstate the health insurance tax deduction for our farmers, ranchers 
and other self-employed business owners.
  Mr. MOYNIHAN. Madam President, I am pleased to assure the Senator 
from North Dakota that I intend to work expeditiously next year to 
bring legislation to the Senate floor that would extend, on a 
retroactive basis, the 25-percent health insurance tax deduction that 
expired on December 31, 1993. In other words, I intend to make sure 
that the legislation reaches back to protect the deduction for all of 
1993.
  We have been working to solve the tax inequity for self-employed 
individuals for many years. The Finance Committee passed a bill in July 
of this year that would have raised the deduction from 25 to 100 
percent of the health insurance costs of the self-employed. That 
continues to be my goal. Early next year I will work to reinstate the 
25-percent deduction as a starting point to getting a full deduction 
for these costs.
  I consider this an urgent priority. I want Senator Dorgan to know 
that I support the 25-percent deduction and I support expanding it to 
100 percent.

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