March 9, 2005
NASE President Testifies to Congress on Micro-Business Access to Health Coverage
The chief impediment that micro-businesses and the self-employed face in this current economic climate is the ever-increasing costs of health coverage, said National Association for the Self-Employed (NASE) President Robert Hughes last week. Hughes testified at the “Prescriptions for Health Care” hearing held by the House Small Business Committee.
As he opened the hearing, Chairman Donald Manzullo (R-IL) recognized the NASE’s top legislative priority of the self-employment tax on health insurance premiums as an inequity that Congress needs to fix. He pointed to H.R. 1873, the “Self-Employed Health Care Affordability Act” sponsored by him and Ranking Member Nydia Velázquez (D-NY) from the 108th Congress, as the kind of legislation that would correct such inequity.
“We believe the enactment of legislation like H.R. 1873 is about fairness for all business owners – not just corporations. We believe enactment will reduce the ranks of the uninsured,” testified Hughes. “We believe enactment will reduce the net cost of health insurance for the micro-business owner.”
Under current law, the self-employed cannot consider health insurance deductions as ordinary and necessary business expenses, while corporations can. While health care premiums are now considered 100 percent tax deductible for federal income taxes, the self-employed must pay self-employment (FICA) taxes on the amount of the health insurance premium at a rate of 15.3 percent.
Seven in 10 owners of the smallest businesses report they do not provide any type of health care coverage to eligible employees, according to the 2002 NASE “Affordability in Health Care” study. The exclusion of health insurance premiums from the self-employment tax would help the self-employed provide necessary health care coverage for themselves and their families.
Hughes attested to broader problems in the health care sector as well. He called for transparency and access to information within the health care system. He also advised the advancement and expedition of use of technology in medical offices.
Hughes and the NASE support legislative proposals such as association health plans, health care tax credits, and deductibility of plans with health savings accounts to help increase access to and affordability of health care.
“The National Association for the Self-Employed strongly supports continued efforts to find proactive solutions, to address the root causes of continual increases of health care costs and the lack of quality health coverage while also increasing transparency and active participation in our health care system,” Hughes concluded.
To read Hughes testimony, visit http://advocacy.NASE.org.
|
Micro-business Perspective on Social Security Reform: What’s Your Opinion?
Senators and Representatives on both sides of the aisle are making claims about the state of the Social Security system and what needs to be changed. Multiple proposals have been introduced but an agreement seems no closer than in years past. The NASE has been following the Social Security debate closely. As Congress discusses President Bush’s proposal and other alternatives, we want to know what you think about possible reforms.
Take the online member survey on Social Security reform. Let the NASE know your opinions on Social Security by visiting the MyNASE Web site at http://my.nase.org/. Log in to your free MyNASE Web Account. If you have not set up an account, you can do so at http://my.nase.org/ with your member number. Let your voice be heard in the association by taking this Social Security survey during the month of March.
Second Meeting of the Panel on Federal Tax Reform
The President’s Advisory Panel on Federal Tax Reform met for the second time last week in Washington, D.C. Federal Reserve Board Chairman Alan Greenspan, former Secretary of the Treasury James A. Baker, III., IRS Commissioner Mark Everson, and the National Taxpayer Advocate Nina Olson, testified among others. Most of the discussion revolved around the issue of the Alternative Minimum Tax (AMT) and tax code simplification.
“Complexity in the tax code compromises both our service and enforcement missions. That is because complexity obscures understanding,” said IRS Commissioner Everson.
Olson, the National Taxpayer Advocate, pointed out areas of “significant complexity” that included worker classification, retirement provisions, AMT, electronic commerce, and the earned income tax credit. The Office of the National Taxpayer Advocate is an independent office that works to bring awareness to larger, systemic flaws that cause trouble for individual taxpayers, small business taxpayers and IRS employees alike. The issues Olson pointed out often affect micro-businesses.
Many micro-business owners, home-based business owners, and the self-employed prepare their own taxes. The complexity and paperwork burden of the current tax system hinders them from getting all the deductions and returns possible. Therefore, the NASE supports simplification of the tax code.
The tax panel has also called for interested parties to submit public comments. The NASE will be submitting comments in the next couple weeks. For more information on the president’s tax reform panel, visit the panel’s Web site at http://www.taxreformpanel.gov/index.shtml. For more information on the NASE’s tax policy stance, visit http://advocacy.nase.org/.
|
The IRS Dirty Dozen
The IRS released its “Dirty Dozen” list of tax schemes and warns taxpayers to avoid falling into plots that “sound too good to be true” because they probably are. This year’s Dirty Dozen includes:
Trust Misuse Frivolous Arguments Return Preparer Fraud Credit Counseling Agencies "Claim of Right" Doctrine “No Gain” Deduction Corporation Sole Identity Theft Abuse of Charitable Organizations and Deductions Offshore Transactions Zero Return Employment Tax Evasion
To learn more about each of these possible tax scams to avoid them, visit the IRS Web site at http://www.irs.gov/newsroom/article/0,,id=136337,00.html.
Do any of these issues affect you? Visit the NASE Legislative Action Center and “Tell Your Micro-Business Story.” This will help the NASE understand - on a personal level - how key legislative issues are affecting your business and your bottom line.
For more information about any of the articles in Washington Watch, contact Katy Dyer, NASE public affairs associate, at (202) 466-2100 or advocacy@nase.org.
|
|
|
