As an ASBA member, you now have free access to news and updates on important issues from our legislative team in Washington DC.

March 2006
by James C. Musser, ASBA Washington Representative

New legislation has been introduced to make it easier for small business owners to afford health insurance for themselves and their families. Plenty of good news has come from the economic front this month and Congress has been making steady progress on developing a budget for Fiscal Year 2007. These items and more go into this month’s roundup of news from our nation’s capital.

Health Care/Taxes: House Small Business Committee Chairman Don Manzullo (R-IL) and Congresswoman Melissa Hart (R-PA), an important member of the House Ways and Means Committee, have joined forces to introduce the Equity for Our Nation’s Self-Employed Act. The bill, also known as H.R. 4961, is designed to allow small business owners to deduct health care costs from their payroll taxes which include Social Security and Medicare taxes. Current law allows small business owners to deduct the cost of their health insurance from their individual income taxes. The self-employed pay a 15.3 percent payroll tax on top of their individual income tax. According to government figures, the average self-employed individual pays nearly $11,000 annually for health care coverage and would save over $1,600 from this tax deduction. The legislation was introduced on March 15 and referred to the house Committee on Ways and Means.

Health Care II: The Congressional Budget Office (CBO) announced earlier this month that the estimated price of the new Medicare Part D Prescription Drug Benefit should cost $5 billion less over the first ten years of the program than originally thought. Chairman Bill Thomas (R-CA) of the House Ways and Means Committee, which has jurisdiction over health care, said “Millions of Americans are seeing benefits and at a lower cost. Competition between plans is working and both taxpayers and beneficiaries are reaping the benefits.”

Economy: The economy created 243,000 new jobs last month and unemployment swooned to 4.8 percent. Most economists define full employment as an unemployment rate between four and six percent. Loudon County, Virginia in the Washington, D.C. suburbs with three percent unemployment officially has a labor shortage. New jobless claims dropped by 11,000 last week and the Labor Department also reports that inflation posted a tiny 0.1 percent increase last month.

Budget: The Senate has passed its version of the Congressional Budget Resolution, S. Con. Res. 83, by a vote of 51-49. The House is in the process of crafting its version of the annual spending blueprint. The final budget will be a combination of the work of the two chambers and best estimates at this point indicate the resolution will approve more than $2 trillion in spending and result in a budget deficit in excess of $300 billion.

Hurricane Aftermath: Supplemental appropriations have been passed by the House on a vote of 348-71 to help the victims of Hurricanes Katrina and Rita. The bill includes an additional $542 million for the Small Business Administration to cover both the costs of loans and administration of the disaster loan program.

ASBA will continue to closely monitor all of these developments and report on any issues that might have an impact on small businesses and the people who run them.

James C. Musser, Esq. is a legislative consultant based in Falls Church, Virginia. His reports are updated monthly.