02/ 02/ 2007
by Shannon McRae
While you work to grow your bottom line, NFIB works to protect it
Even though you're in business for yourself, you still work for someone else: Uncle Sam. Small-business owners often feel like they have to hand the government as much money as they get to take home every year. In fact, taxes--both federal and state--consistently rank among the top 10 most severe problems for small-business owners, according to NFIB's Small-Business Problems and Priorities survey.
With a new Congress in place, there's a good chance many of the NFIB-supported tax cuts in recent years won't be extended. NFIB will work with congressional leaders to explain that every dollar you don't give to the government goes back into growing your business--and the overall U.S. economy. Here are some of the top issues on our tax-relief radar:
Small-Business Expensing: Section 179 expensing allows small businesses to deduct all or part of the costs of certain qualifying equipment (like machinery, office equipment or new technology) in the year it is placed into service, instead of over a specified amount of time. However, there are limits to the amount you can write off. In recent years, those limits were as low as $25,000.
But thanks to hard work by NFIB and its members the amount has been increased to $100,000 and indexed to inflation, which actually makes it $108,000 for 2006 returns. Unless Congress acts, this provision will expire after 2009, and the expensing limits will return to their previous levels of $25,000.
Death Tax: Family businesses will never be safe until the death tax is permanently repealed. A long-time contentious issue for NFIB members, this unfair tax literally taxes families out of their businesses. NFIB believes the government has already taken its fair share from a business during an owner's lifetime.
In 2001, Congress reduced the death tax and scheduled exemption increases every year until 2010 when it is repealed entirely. But in 2011, the tax reverts to its full 55 percent unless lawmakers permanently repeal it. NFIB continues to support permanent relief, but given the makeup of the new Congress, a compromise bill may be discussed.
Tax-code simplification: The IRS estimates that the tax gap--the difference between what taxpayers should have paid and what they actually pay--is about $345 billion. NFIB thinks that amount could be lower if the U.S. tax code weren't so confusing. Complex and unclear tax rules cause frequent errors--even among well-intentioned business owners. To help simplify the process, NFIB supports several measures, including simplifying cash accounting rules, clarifying the definition of an independent contract and clarifying the home-office deduction.
NFIB.com
Learn more about these and the other federal tax-related issues NFIB is working to fix in the "Tax Relief" section of www.NFIB.com/issues. To find out how NFIB is fighting taxes in your state, visit your state Web page at www.NFIB.com/stateabbreviation (Ex: www.NFIB.com/AL)
