Dear Representative:
On behalf of the National Federation of Independent Business (NFIB), the nation's leading small business advocacy group, I am writing to urge your support of the McCrery substitute amendment to H.R. 3920, the Trade and Globalization Assistance Act of 2007. NFIB members are opposed to the provisions in H.R. 3920 that extend the FUTA surtax and expand unemployment benefits. The McCrery Amendment removes these two provisions, and therefore will be considered an NFIB Key Vote for the 110th Congress.
The Trade and Globalization Assistance Act contains two provisions that are especially harmful to small business. The unemployment modernization provisions in H.R. 3920, as reported from Committee, include an extension of the FUTA surtax. Created in 1976, this surtax was meant to be temporary and was enacted to address shortfalls in the federal unemployment trust fund. Today however, that fund is running a $35 billion surplus. This provision will result in an unnecessary tax increase of over $5 billion on all employers and is especially problematic for small-business owners.
H.R. 3920 also includes a substantial expansion of unemployment benefits that will result in new state payroll taxes on small business. The bill creates a temporary $7 billion fund that states can fully access if they agree to expand their unemployment insurance benefits. Some of the suggested extensions include allowing part-time workers to be eligible for benefits and extending benefits beyond 26 weeks if an individual exhausts their initial benefits and are in a job training program. Once the federal payments provided for in H.R. 3920 cease, states will be forced to increase payroll taxes to support the expanded benefits.
Payroll taxes are the most burdensome taxes that small-business owners pay. Our surveys show that 41 percent of small-business owners pay more in payroll taxes compared to other taxes. These taxes place an especially harsh burden on small-business owners, many of whom face cash flow issues and must pay these taxes regardless of profitability. Further, a 2001 NFIB Member Survey found that 89 percent of our members opposed expanding unemployment benefits to part-time workers.
The Substitute Amendment does not include these burdensome provisions. Specifically, it does not expand the FUTA surtax, which is set to expire at the end of this year. Additionally, it does not include the expansion of unemployment benefits.
The included unemployment insurance provisions in H.R. 3920 simply furthers the tax burden on employers and takes away money that would ordinarily be spent on expanding their businesses and creating more jobs. Because it removes these burdensome provisions, the McCrery Substitute Amendment will be an NFIB Key Vote for the 110th Congress.
Sincerely,
Dan Danner
Executive Vice President
Public Policy and Political
