NFIB

As Congress wraps up for the year, NFIB continues to lobby for permanent tax relief. While the House has passed a tax-relief package that awaits the Senate’s review in the spring, small-business owners know the fight for tax and fiscal stability is far from over.

NFIB presses forward on relief measures
Thanks to pressure from NFIB and its members, the House recently passed the Tax Relief Reconciliation Act of 2005, which extended the new, lower capital gains and dividend tax rates, as well as continued favorable depreciation for leasehold properties and restaurants. The Senate is expected to consider a similar measure in early 2006.

Many small businesses will be thrilled to hear that another two-year extension to small-businesss expensing is included in the House bill. Formally called Section 179 expensing, this update to the tax code initially passed in 2003 and last year was extended through 2007. The change provides small businesses with a $400,000 investment limit and allows them to expense up to $100,000 each year, instead of depreciating the equipment. When this relief expires, the levels will revert back to a $200,000 investment limit and only permit $25,000 each year in expensing. NFIB will continue to fight to make the increased levels permanent, as they provide stability and allow small-business owners to plan for the future without worrying about inflation.

Alternative minimum tax affects more small-business owners each year
The House also recently passed a bill to extend relief from the alternative minimum tax, which is expected to affect 30 million taxpayers by 2010 if relief is not made permanent. The tax, which initially was designed to ensure that the wealthy would not escape paying taxes altogether, now wipes out deductions, credits and lower tax rates otherwise available for many middle-class families and small businesses.

Death tax relief and income-tax rate reductions set to expire
Originating from the Economic Growth and Tax Relief Reconciliation Act of 2001, death tax relief will expire in 2011. NFIB leads the charge against the death tax as the head of the Family Business Estate Tax Coalition, working to repeal this burdensome tax, the leading cause of small-business dissolution. At the end of the summer, thanks to years of hard work by NFIB and members like you, the Senate was poised for a key vote on permanent repeal of the death tax, but the devastating Gulf-Coast hurricanes dramatically altered the congressional landscape for the fall. NFIB is now working to gear up the FBETC for this fight in 2006.

Income-tax rate reductions were also part of the 2001 tax-relief package, but like the other tax relief mentioned here, they have an expiration date. Approximately 85 percent of small-business owners file their taxes as individuals, which means that the tax refunds go right back into the business. Permanently increasing income-tax rate reductions will continue to provide small-business owners with the money to create new jobs and improve benefits and pay for their employees.

What you can do now

• Check your e-mail preferences on NFIB.com by registering as a member (click "Sign In" or "Join" in the black bar above this article, or "My Account" to check your preferences if you're already a member) to ensure you are signed up for "Legislative E-Watch." When you are, you'll receive action alerts on pending legislation like the death tax—you'll know exactly when to contact your lawmakers.