Home-Business Owners Want Tax Reform and Clearer Rules

Article excerpt

Two years ago, President Clinton invited hundreds of entrepreneurs to Washington for the White House Conference on Small Business. Partners, sole proprietors and shop owners from all over the country came to listen to Clinton declare his concern for their future. But the president offered few solutions to the problems these businesspeople confront daily. Now more than ever, they want the White House and Congress to clarify rules on independent contractors, make health insurance fully deductible and rewrite the tax code for home-office deductions

Washington's inaction is about to end. Sen. Kit Bond, Republican from Missouri, has gathered 17 cosponsors for his Home-Based Business Fairness Act of 1997, and Rep. Jim Talent, another Republican from the Show-me State, is introducing a companion bill in the House. Though House Speaker Newt Gingrich has backed off on huge tax cuts, the GOP faithful want to) deliver on their promises to one of their core constituencies.

"Clearly, home-based businesses represent one of the fastest-growing sectors of the economy," Bond says. "Thanks to the technology offered through modems, fax machines and cellular phones, in excess of 9 million Americans now operate home-based businesses, bringing to 14 million the number of people who earn income from a home-based business."

Mary Beth Reilly, Senate lobbyist for the National Federation of Independent Businesses, says that home-based entrepreneurs are running up against outmoded rules and regulations from a government that hasn't kept pace with the contemporary business climate. While large corporations such as IBM, Coca-Cola and Intel can deduct 100 percent of their share of employees' health-care costs, "the self-employed farmer, child-care provide or consultant can only deduct 40 percent of the cost of the insurance," Reilly says.

For example, Susan Pepperdine, a self-employed businesswoman in the Kansas City area, says it costs $425 per month to insure herself for health care. But 4 million other Americans -- about 25 percent of the nation's self-employed entrepreneurs -- don't carry health-care insurance for themselves or their families, and many blame the tax code.

"Unlike large- or medium-size businesses, those that have resources to offset the burden of taxes and regulations, small businesses face an uphill fight from the start," says Janet Bonet, president of the Omaha chapter of the Nebraska Home-based Business Association. …