Payroll Tax RELIEF Act - Letter of Support

April 2, 2009

Dear Representatives Minnick and Schock:

On behalf of the National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, I am writing to express our support for H.R. 1836, the Small Business RELIEF Act.  Lost sales is the biggest problem affecting small businesses and this bill remedies the problem by allowing small businesses to keep more of their money to get through the current economic climate. 

Recent data from the NFIB Small Business Economic Trends (SBET) survey indicates the sales index for small businesses is at an all time low. The slowdown in sales is having a broader effect on the overall economy with the SBET survey showing historic lows in planning to hire, making capital investment, and replacing investment.

H.R. 1836 would eliminate the payroll tax for small businesses for six-months providing a double benefit to the economy by helping struggling businesses reduce costs and providing working Americans with extra money to spend where they see fit.  A payroll tax holiday directly benefits lower- and middle-income taxpayers by increasing their paycheck by the amount they would owe towards the OASDI portion of the payroll tax – currently 6.2% per paycheck. For many taxpayers, this will be a significant increase in their take home pay and provides them with greater purchasing power.

The payroll tax holiday also supports employment directly by reducing the cost of labor through the elimination of the 6.2% portion of the payroll tax on employers. The payroll tax is in many cases the most burdensome tax a small business pays, since no matter how poorly their business is performing, they must make regular payroll tax deposits. Eliminating the payroll tax can reduce unemployment and keep people working during a period of slowed economic growth. A reduction in the cost of labor has the added benefit of putting money back into the business to cover the cost of labor and other business expenses.

Small business created 70 percent of the net new jobs in the last decade and has led our economy out of past recessions.  Small businesses are ready to lead us out of another recession, but they need tools to do so.  H.R. 1836 provides immediate capital that small businesses need to operate and create new jobs. 

Thank you for introducing this legislation, and we look forward to working with you on this issue.

Sincerely,
 
Susan Eckerly
Senior Vice President
Federal Public Policy