NFIB is committed to advocating for tax solutions that will provide tax relief, simplicity and certainty to small businesses. As America’s small businesses truly are the backbone of our economy, Congress must consider the impact that tax policy has on their ability to succeed.
As Congress considers broad-based tax reform, NFIB continues to work with lawmakers to ensure the small business tax priorities are central to the debate. High tax rates and the complexity of the current tax code are persistent problems for small business owners. Fundamental tax reform is one way that Congress can create an economic environment which helps small businesses thrive.
High tax rates are a problem for small businesses. High tax rates reduce the after-tax income that owners need to invest back in their business to assure its viability and growth as a creator of jobs. We support low tax rates so that small business owners keep more of their money to reinvest in and grow their business.
In early 2011, NFIB successfully led the fight in Congress to repeal the expensive and burdensome tax paperwork requirement that was included in the Patient Protection and Affordable Care Act of 2010, the national healthcare law. The mandate would have expanded the requirement to use a Form 1099-MISC to include the purchases of goods and services from businesses. Although the Form 1099 requirement was repealed, small business owners should be aware that other mandates still exist that require business owners to send 1099s to the IRS.
Permanent Estate Tax Repeal
NFIB supports a full repeal of the estate tax. Since many small businesses are family-owned or closely-held, they must plan for the estate tax if they want to keep the business operating after the death or retirement of the owner. Protecting small business from the estate tax is important to keep Main Street family businesses operating for future generations.
One of NFIB’s legislative priorities is to defend the ability of small businesses to use independent contractors. Some in Congress propose to give greater authority to government agencies to determine whether a service provider is contractor versus an employee. Additionally, the current 20 factor test is confusing, complicated, and can lead to inadvertent violations by small businesses.
Tax Code Simplification
Small businesses owners recognize that the current tax code is too complicated and impossible to understand. Taxpayer confusion, IRS disputes and errors would be substantially mitigated if the tax code rules were easier to read and follow.
NFIB believes the Alternative Minimum Tax (AMT) should be repealed. The AMT is a remarkably complex provision in the tax code. It requires taxpayers to calculate their taxes twice and then pay the larger amount. The AMT was originally designed to ensure that wealthy Americans pay a reasonable level of their income in taxes. However, Americans in the middle class, including many small business owners, are now subject to the tax because of the combined effects of inflation and the reductions in the regular income tax.
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