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Feel the Burn

A new bill could help small companies pump up tax deductions.
August 1, 2005
URL: http://www.entrepreneur.com/article/78848

Smaller companies will be able to get fiscally fit as their employees become physically fit if the Workforce Health Improvement Program Act becomes law. The bill (S.772/H.R. 1634) would allow small businesses to deduct the expense of reimbursing employees for health-club fees. Large companies frequently provide fitness centers on-site, the costs of which are already deductible.

The bill has support from both Republicans and Democrats in the House and Senate, making it easier for the legislation to hurdle obstacles on its way to passage. The legislation was originally introduced in the 108th Congress in July 2003, but it did not move forward--not an unusual situation for a first-time bill.

Sen. John Cornyn (R-TX), a member of the Small Business and Entrepreneurship Committee, hopes 2005 will be different. He and Sen. Tom Harkin (D-IA) are the prime Senate sponsors of the bill. "Public health experts unanimously agree that active lifestyles result in decreased health-care costs, reduced governmental spending, fewer illnesses and improved worker productivity," Cornyn says.

The biggest hurdle the bill will have to surmount is its cost to the federal Treasury. New tax benefits that deepen the federal deficit are not especially popular these days. Don Stewart, a spokesman for Cornyn, says the Joint Committee on Taxation is planning to make an estimate of the federal revenue that will be lost if the bill becomes law.

A number of sports, HR and employee-benefits trade associations are supporting the bill, but no small-business groups are on the list of supporters supplied by Cornyn's office. They may have to start doing some heavy lifting if they want to bulk up their bottom lines.


Stephen Barlas is a freelance business reporter who covers the Washington Beat for 15 magazines.