Democrats Need to Recognize the Twenty-Five Million Self-Employed

There are over twenty-five million self-employed Americans. They account for nearly 3/4 of American businesses, with over a trillion dollars in receipts. The labors of the self-employed are as old as agriculture, and as new as the gig economy. The self-employed cut across political party, age, sex, education, religion, creed and geography. They are the backbone of rural and local urban economies. Because of the Self-Employment Tax, they are acutely aware of their identity as “self-employed,” but not of their large numbers and diversity in the United States. The self-employed are also the fastest growing and largest untapped voting block in the country. Their influence can easily swing future Congressional and Presidential Elections. Political movements succeed when people fight their own oppression. Which candidates will call out to them by name and need?

The faces of five self-employed Americans

Photos by Julie Dermansky, Alaina Buzas, Dermansky, Omar Ayub, Dermansky

Swing States in the 2020 Presidential Election

 Self-Employed% of Workforce2016
Victory Margin
New Hampshire106,00015%2,736
North Carolina788,00015%173,315
Sources: Census Bureau, BLS, USDA

Health Insurance

Enable the self-employed to deduct their health insurance premiums as a business expense.

The businesses of the self-employed deserve the same deduction for health insurance as large corporations. Allowing a self-employed business to deduct a health insurance premium of $10,000 as a business expense would save that self-employed business about $1,500 on its Self-Employment Tax; the 15.3% flat tax on all their income. This deduction represents very basic economic and social justice for the self-employed (corporate capitalism vs. small business capitalism), and demands immediate attention from Democrats and Congress. The bipartisan Tax Fairness for the Self-Employed Act (HR 3880), which would make this deduction law by amending the Internal Revenue Code of 1986, is still looking for a Senate sponsor.

CONTINUE READING » Example of proposed reductions

Working/Middle Class Tax Reform

Reduce the Self-Employment Tax from 15.3% to 7.65%, the current employee share of Social Security and Medicare contributions, for the first $50,000 of income.

From rural to urban America, every person filling out Schedule C on their tax return will recognize this 7.65% tax reduction as a true and fair tax cut. As many live paycheck to paycheck, this populist message builds on the reality that the self-employed will reinvest their savings in healthcare, childcare, education and their business.

CONTINUE READING » History of the Self-Employment Tax

Economic Development

10% of Small Business Administration loans must be microloans.

The Small Business Administration loan program must be made to reflect the fact that nearly 3/4 of businesses in the United States are self-employed. Of the $25.44 billion SBA loans made in 2017, only $81.5 million went into microloans.

By starting businesses that others consider too risky, immigrants and other working people with the least to lose are proven providers in their communities. Expanding the microloan program to 10% of SBA loans, from less than 1/2 of 1%, would signal the value of the twenty-five million self-employed entrepreneurs whose neighbors depend on their success.

COVID-19 Pandemic

The Pandemic Unemployment Assistance Program of the CARES Act has succeeded in getting money into the hands of millions of self-employment people whose businesses have been harmed by the COVID-19 pandemic. Although the program has been flawed, in part because it has been administered by the vagaries of state authorities, the $600 a week that millions of unemployed self-employed have received from the federal government has been very helpful to those whose unemployment claims were recognized by their respective states. By May 9, nearly eight million self-employed were receiving this benefit.

One important success of the PUA program is that for the first time the media and politicians have regularly used the term “self-employed” to describe these important businesses of working people. Democrats need to use the success of the PUA program to continue to recognize and help the self-employed, and take credit for this assistance in the 2020 General Election.