NFIB fights for small business tax relief at the state and federal levels, because we know that a complex tax code and burdensome taxes are among the biggest challenges facing small business owners. According to the most recent NFIB Small Business Problems and Priorities survey, federal taxes on business income rank as the third worst problem and tax complexity holds fifth place among major concerns.
NFIB has achieved significant victories for small business, including the reduction of federal income-tax rates and an increase in the expensing limit for small businesses. We are committed to making these changes permanent and securing more tax relief for small businesses.
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 a win for small businesses, the president signed off on a bill to repeal the onerous IRS Form 1099 reporting requirement, which was included as part of the Patient Protection and Affordable Care Act. NFIB led the repeal effort on behalf of over 350,000 member businesses. Small business owners should be aware that some 1099 reporting mandates are still in effect.
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.
NFIB supports clearly defining who is an independent contractor. The current 20 common-law factor test for determining an employee vs. an independent contractor has handcuffed small businesses.
Expensing (Section 179) allows small businesses to immediately deduct the full value of investments in equipment in the year the investment is made rather than claiming the deduction over a longer depreciation period. This simplifies claiming the deduction and means that businesses receive the capital associated with their investment sooner. To help small businesses, higher expensing limits should be made permanent.
NFIB supports providing tax equity to the nation's self-employed by expanding the deductibility of health insurance to apply to employment taxes, so that all who purchase their own health insurance receive a 100% tax deduction.
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 must be repealed. This unfair tax was originally designed to ensure the wealthiest Americans paid their fair share of taxes. Now, increasing numbers of middle-class taxpayers are socked with hefty bills each April.