We are committed to advocating for fiscal solutions that will provide both tax relief and certainty to small businesses. Congress must consider the impact that tax policy has on small businesses’ ability to succeed.
As Congress debates tax reform, it is necessary to keep in mind the issues that are most important to small business owners. High tax rates and the complexity of the current tax code are persistent problems for small business owners. Fundamental tax reform is one way that Congress can create an economic environment which helps small businesses thrive.
High tax rates are a problem for small businesses because they siphon off the after-tax income that owners need to invest back in their business to assure its viability and growth as a creator of jobs. We support low tax rates so that small business owners keep more of their money to reinvest in and grow their business.
In early 2011, NFIB successfully led the fight in Congress to repeal the expensive and burdensome tax paperwork requirement that was included in the Patient Protection and Affordable Care Act of 2010, the national healthcare law. The mandate would have expanded the requirement to use a Form 1099-MISC to include the purchases of goods and services from businesses. Although the Form 1099 requirement was repealed, small business owners should be aware that other mandates still exist that require business owners to send 1099s to the IRS.
NFIB supports a full repeal of the estate tax. Since many small businesses are family-owned or closely-held, they must plan for the estate tax if they want to keep the business operating after the death or retirement of the owner. Protecting small business from the estate tax is important to keep Main Street family businesses operating for future generations.
One of NFIB’s top legislative priorities is to better define who is an independent contractor. The current 20-factor common law test to determine who is an employee vs. an independent contractor continues to handcuff small businesses.
NFIB has long fought to increase the small business expensing limit so businesses are able to immediately recover their costs and reinvest in their businesses. It also simplifies the tax code by allowing an immediate deduction, instead of depreciation deductions over a specified recovery period.
NFIB continues to fight to ensure that healthcare costs truly are fully deductible for self-employed individuals, as they are for other businesses.
The tax code is too complicated, and taxpayer mistakes and errors would be substantially mitigated if the tax code rules were easier to read and follow. We believe that simplifying the tax code—and not placing new reporting burdens on small businesses—is the best way to reduce the tax gap.
NFIB believes the Alternative Minimum Tax (AMT) should be repealed. The AMT is a remarkably complex provision in the tax code. It requires taxpayers to calculate their taxes twice and then pay the larger amount. The AMT was originally designed to ensure that wealthy Americans pay a reasonable level of their income in taxes. However, Americans in the middle class, including many small business owners, are now subject to the tax because of the combined effects of inflation and the reductions in the regular income tax.