Joyce M. Rosenberg

Dan Danner never expected to end up in the middle of the health-care debate. Or, for that matter, in politics.

As president of the National Federation of Independent Business, the biggest group representing small business owners in the United States, Danner helped the attempt to overturn the health-care overhaul. Last month, the federationís lawyers were among those arguing against the law before the Supreme Court.

The federation, which has lobbied for small businesses since its founding in 1943, contends that the law will harm small businesses by driving up their health insurance costs. It argued that a provision that requires individuals to buy health insurance is unconstitutional. Both sides in the debate are waiting to see whether the Supreme Court strikes down the individual mandate or the entire law ó or allows the law as a whole to stand.

Danner is on the forefront of other issues that affect the federationís 350,000 members, many of whom have companies with just a handful of employees. He leads lobbying on concerns such as taxes and regulation. The group is among many business advocates calling for lower tax rates for small business owners whose companies are sole proprietorships, partnerships or what are called S corporations. The profits from these companies arenít taxed ó theyíre ďpassed throughĒ to their owners, who are then taxed as individuals. Often, their tax rates are higher than those for companies such as General Motors and Apple.

Many tax rates, including individual rates, are scheduled to go up at the end of the year, unless Congress acts before then. Individuals could pay as much as 39.5 percent.

Danner joined the federation in 1993 after lobbying for steel maker Armco Inc. and holding positions in the Department of Commerce and the Reagan White House. Politics wasnít his first choice.

ďI was torn in college between acting and being an engineer,Ē Danner said. ďI pretty quickly figured out I wasnít good enough at either one. I figured out I better find another career, and somehow, I stumbled into politics.Ē

Danner spoke with the Associated Press about the federationís agenda. Here are excerpts from the interview, edited for clarity and brevity:

Q: What do you expect to happen after the Supreme Court rules on health care?

A: Itís easier if the whole law falls, because then, essentially, you have a clean slate and weíre back in overall health-care reform, ground zero, to start over. We intend to be very involved in this debate as we have been for a couple of decades. If just the individual mandate falls, I think itís a little more up in the air.

Q: Letís say the entire law is struck down. One idea that the federation has supported to help lower health costs would allow small businesses to band together to form groups to buy insurance more cheaply. Do you still support that?

A: [Yes], across state lines or on a national basis. Right now, large companies have the ability to offer one insurance product in multiple states. They have protection under ERISA [the Employee Retirement Income Security Act] and the Labor Department, and theyíre not subject to the individual laws in each state. If youíre GM and you have plants in 25 states, you can offer one set of products in all 25 that meets the best needs of your employees. In our similar approach that weíve tried to get for several decades, bunches of small businesses would be able to purchase health care like General Electric or GM and offer one set of products in multiple states and have the same purchasing power and clout when they negotiate with insurance companies.

Q: Whatís on the agenda after health care?

A: The next big one is clearly the enormous tax bomb thatís set to go off at the end of the year if nothing happens. This is a big one, not just expiring provisions, but the overall impact of tax uncertainty. As a business owner, I donít know what my tax is going to be.

Q: What are the provisions that affect business owners?

A: The top tax rate would go from 35 percent to 39.5 percent. The estate tax would go from 35 percent and a $5 million exemption to 55 percent and a $1 million exemption. Both the capital gains and dividends taxes would go up from the current 15 percent on both ó capital gains goes up to 20 percent and dividends go to your individual tax rate. If youíre at 39.5 percent, the dividend tax goes to 39.5 percent. ... There seems to be lots of support for lowering the corporate tax rate in some places, not much about lowering the rate on smaller pass-through companies.

Q: Do you hear from your members that theyíre holding back on expansion because they donít know what their taxes will be like?

A: Absolutely. ... I think all of this uncertainty does have a significant impact on investment in your business. The harder it is to predict what the return on your investment is going to be, the less inclined you are to invest. Itís very different for small business owners because itís their money ó itís not stockholders money. Do I invest in my business or put that money into Sallyís college fund? These are real gut-wrenching decisions and the more uncertainty you toss in ... even the most rabid entrepreneurs take a step back and say, golly, I just donít know.

Q: Whatís your sense of the climate for small business lending? Is it easier for small companies to borrow than it was a year ago or two years ago?

A: By and large, itís not particularly easier, but for our members, itís not a problem for a great deal of them.