Rep. Herger Proposes Health Coverage Tax Relief for Self-Employed
What's wrong with the current system?
Who are the Self-Employed
What would H.R. 3660, the "Equity for Our Nation's Self-Employed Act" accomplish?
Important Documents
Letters to Representatives Urging Support for Repeal
Letters of Support and Press Releases from Outside Associations
Coalition Supporting Equity for Our Nation’s Self-Employed
What's wrong with the current system?
Under the current tax code, corporations are able to deduct health insurance costs incurred on behalf of their employees as a pre-tax business expense. Their employees may also pay for health coverage with pre-tax dollars. Individuals that file as sole-proprietors, however, must pay the self-employed equivalent of payroll taxes, or the Self-Employment Tax (SET) of 15.3 percent on health insurance costs. This is the only business combination that must pay tax on employee health care costs. Nationwide, this extra tax on healthcare results in an average added tax burden of $1,850 for the self-employed and their families.
Gloria, a sole proprietor from Redding, pays more than $1300 in extra taxes on her health costs because of the self-employment tax. Read More
Although many consider themselves "self-employed," only the owners of businesses that are organized as sole proprietorships pay the self-employment tax or SET, and then only if their business has positive income. Across the U.S. there are more than 21 million sole proprietors who could be subject to some level of self-employment tax. In my own home state of California, there are more self-employed individuals than anywhere else in the country, with roughly 13 percent of the nation's sole proprietorships, or more than 2.8 million self-employed individuals. The vast majority of the businesses owned by self-employed sole proprietors are small and micro-businesses with 10 or fewer employees. Despite their size, these businesses generate more than $800 billion in economic activity in the U.S.
What would H.R. 3660, the "Equity for Our Nation's Self-Employed Act" accomplish?
Representative Wally Herger and Ron Kind of Wisconsin introduced H.R. 3660, the Equity for Our Nation’s Self-Employed Act to eliminate the 15.3 percent "payroll" tax on health insurance premiums for the self-employed.
On a teleconference following introduction, Herger remarked that "This critically important legislation would help expand health coverage to millions of currently uninsured American taxpayers, and make coverage more affordable to millions more who already have some level of insurance."
Noting the cooperative work on the bill, Herger stated, "This bill is a truly bipartisan effort aimed at leveling the playing field for millions of self-employed small business owners, including nearly 3 million in California alone, through common sense health care tax relief. I look forward to working with Rep. Kind in building support for this important change to our tax laws."
- Herger's Introductory Remarks in the Congressional Record
- Herger's Press Release on Introduction of H.R. 3660
- Current Cosponsors of H.R. 3660
Letters to Representatives Urging Support:
Letters of Support and Press Releases from Outside Associations:
- American Farm Bureau Federation (AFBF)
- National Cattlemen's Beef Association (NCBA)
- National Federal of Independent Businesses (NFIB) Press Release
- National Association of the Self-Employed (NASE) Press Release
- NASE Letter of Support
- NASE Article in Self-Employed Magazine
- Coalition for Affordable Health Care (CAHC)
Coalition Supporting Equity for Our Nation’s Self-Employed:
