Statement of Administration Policy: H.R. 831 - Permanently Extend the Tax Deductibility for Health Insurance Costs for Self-Employed Individuals

(Senate)
(Archer (R) TX and 3 cosponsors)

The Administration supports the primary purpose of H.R. 831, as reported by the Senate Finance Committee — to reinstate for 1994 the 25 percent tax deduction for health insurance premiums for self-employed individuals and increase the deduction to 30 percent on a permanent basis thereafter.

The Administration, however, opposes one of the bill's offsets — i.e., the outright repeal of the current tax treatment for the sale of radio and television broadcast facilities and cable television systems to minority-owned businesses (so-called "section 1071 benefits"). The Administration is undertaking a comprehensive review of affirmative action programs, including certain aspects of section 1071 benefits. As part of the section 1071 review, the Administration will consider possible modifications to the ownership and holding period requirements as well as caps on the amount of gain eligible for deferral.

While the Administration, in the FY 1996 Budget, proposed limiting earned income tax credit (EITC) eligibility based on certain kinds of investment income, the Administration strongly believes that the cap on such income — as set forth in this bill — should be indexed for inflation.

The Administration supports the provision in H.R. 831 that would tax expatriating citizens on untaxed gains — a provision which is very similar to one included in the President's FY 1996 Budget.

Scoring for Purposes of Pay-As-You-Go

H.R. 831 would affect receipts; therefore, it is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act (OBRA) of 1990.

The Administration's preliminary scoring estimates of this bill are presented in the table below. Final scoring of this legislation may deviate from these estimates. If H.R. 831 were enacted, final OMB scoring estimates would be published within five days of enactment, as required by OBRA.

PAY-AS-YOU-GO ESTIMATES
(Receipts in millions)

(Note:

SE Health = 30 percent tax deduction for self-employed persons (includes 25 percent tax deduction retroactive to 1994).

FCC = Repeal of current tax treatment on Sale of broadcast facilities to minority-owned businesses.

EITC = Modification of the Earned Income Tax Credit.

Citizen = Bar citizens from renouncing their citizenship to avoid tax obligations incurred before they renounced.

Other = Change in Section 1033 of the Internal Revenue Code.)