STATEMENT BY THE PRESIDENT

Today I have signed into law H.R. 831, the "Self-Employed Health Insurance Act," that extends permanently the tax deductibility of health insurance premiums for the self-employed and their dependents.

The Tax Reform Act of 1986 (Public Law 99-514) provided a 25 percent tax deduction for health insurance premiums for the self-employed and their dependents. However, this deduction expired on December 31, 1993. This Act reinstates the 25 percent tax deduction for health insurance premiums for 1994 and permanently increases that deduction to 30 percent beginning in 1995.

I strongly support the permanent extension of this deduction. This Act will permit 3.2 million self-employed individuals to claim this deduction for health insurance premiums on their income tax returns, beginning with returns filed for 1994. By making this deduction permanent, we are treating the self-employed more like other employers -- as they should be.

The increase in the deduction to 30 percent is a step in the right direction. In 1993, in the Health Security Act, I proposed an increase in the deduction to 100 percent. Increasing the amount of the deduction will make health insurance more affordable for self-employed small business people who are today paying some of the highest insurance premiums in the Nation.

In approving H.R. 831, however, I must note my regret that the bill contains a provision that repeals, as of January 17, 1995, the current tax treatment for the sale or exchange of radio and television broadcast facilities and cable television systems to minority-owned businesses (so-called "section 1071 benefits").

My Administration has undertaken a comprehensive review of affirmative action programs, including certain aspects of the section 1071 benefits. The Act has unfortunately preempted the Administration's ability to examine section 1071 in the context of this comprehensive review.

I am also concerned that, in repealing section 1071 benefits, a highly objectionable provision was added to H.R. 831 in conference. This provision will permit certain pending applicants to receive section 1071 benefits, while denying them to other pending applicants. This is a perfect example of where a President could use line-item veto authority to weed out objectionable special interest provisions. I urge the Congress to appoint conferees and move forward expeditiously with line-item veto legislation that provides authority -- this year -- to eliminate special interest tax and spending provisions.

Finally, I regret that the conferees on the part of the House of Representatives objected to including in H.R. 831 a provision that would have closed a tax loophole for the wealthy. This provision, which was in the Senate-passed version of the bill, closely resembled a provision I proposed in my FY 1996 Budget. The provision would have prevented wealthy Americans from avoiding their U.S. tax obligations by renouncing their citizenship.

Despite these concerns, I am signing H.R. 831 because of the very important benefits this legislation will provide to our Nation's self-employed and their families.

WILLIAM J. CLINTON

THE WHITE HOUSE,

April 11, 1995.

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