11/ 30/ 2007
by Todd Stottlemyer, NFIB President and CEO
New York Rep. Charles Rangel, the chairman of the U.S. House Ways and Means Committee, recently said he's willing to consider reducing tax rates on America's corporations to help them remain competitive in a global economy.
He also said he was willing to work with Treasury Secretary Henry Paulson on ideas from the administration, including reducing the top corporate rate from 35 percent to 27 percent.
We applaud Chairman Rangel's comments, as well as his willingness to work in a bipartisan fashion, as we firmly believe that America must remain competitive. But if we want to help all of our country's businesses, not just the largest corporations, here are some of the things that Congress needs to do for the heart of our country's economy and the creators of most of our new jobs—America's small businesses.
- Chairman Rangel's plan targets large corporations, those that file taxes as C-corporations. However, many of you file as S-corporations and pay the same tax rates as individuals. Tax relief for small entrepreneurs is just as vital to our economy and America's competitiveness as relief for large corporations. On page 25A, you can read more about a particularly nettlesome problem—how the alternative minimum tax is affecting more and more small-business owners who file as individuals—and what's being done to address this issue.
- You've told us that complex, unclear tax rules force small-business owners to spend millions each year on professional tax help—money that can't be invested in growing your business. In addition, even honest, compliant taxpayers make mistakes when filling out their tax forms. These mistakes add to the estimated billions of dollars lost each year to the U.S. Treasury. Simplifying the tax code will help to solve both problems.
- As many of you know, small-business owners are treated differently than Americans who receive their health-care benefits from a corporation. The tax code prevents them from deducting health-care costs from their wage base for self-employment taxes. Americans should not be forced to pay additional taxes simply because they are self-employed. This tax bias should be eliminated.
- A permanent increase in Section 179 expensing limits, which are set to expire in 2010, would allow small firms to expense additional investments. This is a proven strategy that enables those businesses to grow, create new jobs and expand the tax base, increasing revenues to the government.
- Permanent repeal of the federal estate tax for small-business owners will allow them to plan for the future with certainty, including how to pass their business to the next generation without worrying about selling assets to pay for it.
Small firms with fewer than 500 employees represent 99.9 percent of the 26.8 million businesses in the country, both large and small. If America's small businesses were a separate economy, it would be the third largest in the world, trailing only the U.S. economy as a whole and Japan.
In addition, according to the U.S. Small Business Administration, small businesses account for about two-thirds of all net new jobs created in recent years, while every day we read about large corporate layoffs.
I know from talking with many of you that small businesses across America are alive and well. We're going to make sure that isn't forgotten here in Washington, D.C., and that Congress does what it needs to do to ensure that your critical contributions to our economy are recognized with tax laws that permit your businesses to stay healthy and keep growing.
