[Congressional Record Volume 155, Number 52 (Thursday, March 26, 2009)]
[Senate]
[Page S3925]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself and Mr. Hatch):
  S. 725. 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, I rise today along with Senator Hatch to 
reintroduce the Equity for Our Nation's Self-Employed Act of 2009. 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 purchase 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 is 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 families. 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.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
placed in the Record, as follows:

                                 S. 725

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Equity for Our Nation's Self 
     Employed Act of 2009''.

     SEC. 2. DEDUCTION FOR HEALTH INSURANCE COSTS IN COMPUTING 
                   SELF-EMPLOYMENT TAXES.

       (a) In General.--Section 162(l) of the Internal Revenue 
     Code of 1986 (relating to special rules for health insurance 
     costs of self-employed individuals) is amended by striking 
     paragraph (4) and by redesignating paragraph (5) as paragraph 
     (4).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
                                 ______