[Congressional Record Volume 153, Number 163 (Thursday, October 25, 2007)]
[Senate]
[Page S13452]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself and Mr. Hatch):
  S. 2239. A bill to amend the Internal Revenue Code of 1986 to allow 
self-employed individuals to deduct health insurance costs in computing 
self-employment taxes; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, today I, along with Senator Hatch, am 
re-introducing the Equity for Our Nation's Self-Employed Act of 2007. 
This important legislation corrects an inequity that currently exists 
in our tax code that forces the self-employed to pay payroll taxes on 
the funds used to pay for their health insurance while larger 
businesses do not. Because of this inequity, health insurance is more 
expensive for the self-employed. At a time when the number of people 
uninsured is growing at an alarming rate, we need to find ways to 
reduce the cost of health insurance. This legislation is a first 
logical step.
  Under current law, corporations and other business entities are able 
to deduct health insurance premiums as a business expense and to forego 
payroll taxes on these costs. However, sole-proprietors are not allowed 
this same deduction and thus, are required to pay self-employment tax, 
their payroll tax, on health insurance premiums. The self-employed are 
the only segment of the business population that are additionally taxed 
on health insurance. The legislation we are introducing today would 
stop this inequitable tax treatment and allow sole proprietors to 
deduct the amount they pay for health insurance from their calculation 
of payroll taxes, leveling the playing field for the over 20 million 
self-employed in our Nation.
  This problem affects all self-employed who provide health insurance 
to their families. According to the IRS, there are almost 130,000 sole-
proprietors in New Mexico. While we do not know how many of these 
people in New Mexico have health insurance, we do know that roughly 3.8 
million working families in the U.S. paid self-employment tax on their 
health insurance premiums. Estimates indicate that roughly 60 percent 
of our Nation's uninsured are either self-employed or work for a small 
business. According to the Kaiser Family Foundation, self-employed 
workers spent upwards of $12,000 per year in 2006 to provide health 
insurance for their family. Because they cannot deduct this as an 
ordinary business expense, those that spend this amount will pay a 15.3 
percent payroll tax on their premiums, resulting in over $1,800 of 
taxes annually.
  This problem was identified by the National Taxpayer Advocate in 
several of her annual reports to Congress and our legislation to 
correct it is supported by over 40 national and State organizations 
including the National Association for the Self-Employed, the National 
Small Business Association, the National Federation of Independent 
Business, National Association of Realtors, the U.S. Chamber of 
Commerce, and the U.S. Hispanic Chamber of Commerce.
  I look forward to working with my colleagues to get this important 
legislation passed.
                                 ______