Insurance Tax Deductions Help Entrepreneurs
Deducting the cost of health insurance premiums may keep self-employed
entrepreneurs in business, according to a study released by the
Office of Advocacy of the U.S. Small Business Administration.
The study shows that the health insurance deduction for the self-employed
has decreased the likelihood of entrepreneurial exit by 10.8 percent
for single filers and 64.9 percent for married filers.
“Access to healthcare continues to be the top issue for
small business,” said Thomas M. Sullivan, Chief Counsel
for Advocacy. “This study will help Congress and the administration
as they consider policies that help small business and strengthen
Dr. Tami Gurley-Calvez wrote the study, Health Insurance Deductibility
and Entrepreneurial Survival, with funding from the Office of
Advocacy. It examines how the introduction of tax deductibility
for self-employed health insurance premiums affects the chances
of entrepreneurial exit. Among the study’s findings:
* The presence of the health insurance deduction decreases the
probability that a self-employed entrepreneur will choose to exit
the entrepreneurial sector by 10.8 percent for single filers.
* For married filers, the presence of the health insurance deduction
decreases the rate of exit from entrepreneurship by 64.9 percent.
* The absolute dollar amount of the health insurance premium deduction
also influences the probability of exit from entrepreneurial activities.
For single filers a 10 percent increase in the dollar amount of
the deduction reduces the probability of exit by 10.6 percent.
For married filers the probably of exit is only reduced by 1.2
The Office of Advocacy, the “small business watchdog”
of the government, examines the role and status of small business
in the economy and independently represents the views of small
business to federal agencies, Congress, and the President. It
is the source for small business statistics presented in user-friendly
formats and it funds research into small business issues.
For more information and a copy of the complete
report, visit the Office of Advocacy website at www.sba.gov/advo
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