[A similar letter was sent to The Honorable Donald Manzullo,
Chairman, House Small Business Committee]



April 4, 2006
                              
VIA Facsimile and E-Mail

The Honorable Melissa Hart
United States House of Representatives
1024 Longworth House Office Building
Washington, DC 20515

RE: H.R. 4961, The Equity for Our Nation's Self-Employed Act

Dear Congresswoman Hart:

     I am writing to commend you for taking a positive stand
for equity for our nation's self-employed by introducing the
Equity for Our Nation's Self-Employed Act (H.R. 4961).  The
Office of Advocacy (Advocacy) strongly supports this
legislation.  H.R. 4961 is a bold step toward making health
care more affordable for the 10 million self-employed
taxpayers and their families.
     Congress established Advocacy under Pub. L. 94-103 to
represent the views of small businesses before Federal
agencies and Congress.  Advocacy is an independent office
within the U.S. Small Business Administration (SBA), so the
views expressed in this letter do not necessarily reflect
the views of the SBA or the Administration.
     In 2003 Congress passed legislation, signed by
President George W. Bush, which permits the self-employed to
fully deduct their health insurance premiums for purposes of
their income taxes.  This was an important milestone in
reducing the disadvantage self-employed taxpayers face with
respect to health insurance affordability.  Despite the 2003
legislation, the inequity with respect to access to health
insurance has continued because the self-employed are not
permitted to deduct their health insurance premiums when
calculating their payroll taxes.  This unfair practice adds
a 15.3 percent tax to their health insurance premiums that
other working Americans do not pay.
     The Office of Advocacy just released a study entitled,
"Health Insurance Deductibility and Entrepreneurial
Survival" (Tami Gurley-Calvez, April 2006).  This study
shows that the presence of a health insurance deduction
decreases the probability of an entrepreneur's exit from
business.  For single tax filers the rate of entrepreneurial
exit decreased by just over 10 percent.  Health insurance
deductibility decreased the rate of entrepreneurial exit
among married tax filers by 65 percent.  Leveling the field
with respect to health insurance deductibility will have a
significant positive effect on the viability of
entrepreneurial activities.  I have attached a copy of our
study for your reference.
     Thank you for your efforts on behalf of small
businesses.

                         Sincerely,



                         /s/
                         Thomas M. Sullivan
                         Chief Counsel for Advocacy