NFIB

In the recently released NFIB Problems and Priorities survey, respondents pointed to federal taxes on business income as the third most critical problem affecting small business owners. Up from fifth place in 2004, it is considered a critical problem for 25 percent of small business owners.

Four of the survey's top 10 problems are tax-related, reflecting small business' ongoing need for permanent tax relief. Unfair and expensive taxes placed on small business only stand in the way of growth, and for decades NFIB has been fighting to reduce the burden.

Though some of the tax cuts included in the Economic Growth and Tax Relief Reconciliation Act of 2001 and in the Jobs and Growth Act of 2003 have been extended by Congress, small business still awaits permanent relief from several damaging taxes, including:

• The death tax. Also known as the federal inheritance tax or estate tax, the death tax creates a disincentive to expand a business, create jobs—and often taxes a family business right out of the family. Unlike CEOs for large corporations, most small business owners have the entire value of their business in their estate, and when the government automatically inherits 37 to 55 percent of the estate upon the small business owner's death, the family often cannot afford to keep the business going. Much of the damage this tax creates happens well before the owner's death, as the business must spend thousands of dollars on expensive estate planning just to keep the business viable. And, because the business owner pays taxes on the business during his or her lifespan, taxing the business again upon the owner's death essentially amounts to double taxation.
• The Alternative Minimum Tax. The AMT is an incredibly complex tax that requires taxpayers to calculate their taxes twice and then pay the larger amount. It was originally designed to prevent the wealthiest Americans from slipping through a loophole that allowed them to avoid paying their share of taxes, but inflation and individual rate cuts have caused the AMT to begin affecting the middle class. It's estimated that the number of taxpayers subject to the AMT will reach more than 41 million by 2013. NFIB has championed permanent relief from the AMT for years, and continues to work with Congress to find an acceptable solution for small business owners.

Additionally, NFIB has advocated expanding Section 179 expensing, which was recently doubled to $250,000 when President Bush signed the Economic Stimulus for the American People Act of 2008 in February. Unfortunately, the expensing-limit increase will expire and return to its previous limit of $25,000 after 2010 unless Congress passes legislation making the provision permanent. Small business expensing is critical to the growth of small businesses, but the majority of NFIB members reach the $25,000 level in just three months. NFIB will continue to fight for a permanent solution to allow small businesses owners to grow their company at a pace that allows them to keep up with Big Business.

For more information on NFIB's fight for permanent tax relief, visit NFIB.com/taxrelief.  Throughout the summer we will continue to take an in-depth look at the top five problems indicated by the Problems and Priorities survey, available at NFIB.com/research. Stay tuned for more information.