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Washington Watch
February 4, 2004
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NASE Disputes Statements and
Recommendations for New Self-Employed Withholding
As a voice for micro-businesses in Washington, the
NASE is always on the lookout for overly burdensome
regulations or laws that unfairly penalize
micro-businesses. So, too, is the IRS Taxpayer
Advocate, whose mission to reduce taxpayer burden has
long been supported by the NASE.
The Advocate's most recent report to Congress,
however, diverged from this important mission, and
included a withholding proposal for the self-employed.
Advocate Nina Olson blamed an $81 billion "tax gap" of
unpaid taxes from 2001 on the self-employed for
deliberate underreported or non-filing of income. Her
solution to Congress to recoup the lost revenue is to
require that employers withhold 3.5 to 5 percent of
payments to independent contractors.
The NASE strongly disputes the charge that the
self-employed as a group deliberately try to subvert
their tax obligations, and opposes the withholding
requirement. Such a proposal would significantly add
to the compliance and cash flow challenges of
micro-businesses. In addition, since the proposal only
applies to sole proprietors, it blatantly
discriminates against this business structure.
The solution to minimizing difficulties with
compliance is not additional withholding from those
who comply with current tax laws, as the Advocate
suggests. Rather, a solution lies in the
simplification of the tax code and compliance
education to address confusion as the root cause of
reporting and filing errors.
The NASE takes this report seriously. Along with other
small business associations, we have mobilized to
refute the Advocate’s recommendation and dissuade
Congress from considering the proposal.
NASE Attends Presidential Speech on
Access to Affordable Health Coverage
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The NASE joined a small group of business trade
associations last week for a speech by President
George W. Bush on access to affordable health
coverage. The President focused on Health Savings
Accounts, passed in last year’s Medicare overhaul
bill, and added option this gives to small
business owners for extended their coverage. He
also expressed his support of Association Health
Plans as a way to get more self-employed covered
by health insurance. |
Read the NASE position on Health Savings Accounts and
Association Health Plans at the Legislative Action Center.
Bush Budget Request Cuts SBA Funding
In President Bush’s 2005 budget request to Congress for the
U.S. Small Business Administration, funding to the federal
agency was cut 10 percent from last year’s level to $681
million. The request was part of the President’s $2.4 budget for
next year, sent to Congress earlier this week. In it, Bush
proposed to cut funding for nearly half of the federal
government agencies.
While the NASE is pleased that the President’s budget expands
SBA Section 7(a) subsidized loans by 25 percent, we are
concerned that the federal agency has received an overall budget
cut yet again. The NASE is aware of current concerns regarding
the federal deficit. However, in this current economic climate
where the largest increase in job creation is spurred by small
business, we feel it is important and necessary to the well
being of our nation's economy to continue to support the
nation's small business community. Through adequate funding the
Small Business Administration, small business will continue as
the backbone of America’s economy
The NASE continues to advocate for increased independence of the
SBA Office of Advocacy, which includes an independent line-item
in the budget, and increased support for the
SBA Small Business
Development Center program.
For more information on the Small Business Administration's
FY2005 Budget, visit:
www.whitehouse.gov/omb/budget/fy2005/sba.html
Upcoming SBA Events
Mark your calendar for these upcoming events sponsored by the
Small Business Administration:
The Office of Advocacy of the SBA will explore economic issues
likely to affect small business in the coming decades at the
“Entrepreneurship in the 21st Century” conference on March 26.
The event will be in Washington, D.C., and is co-hosted by the
Ewing Marion Kauffman Foundation.
Small Business Week 2004 takes place in Orlando, Fla., at the
Orange County Convention Center on May 19-21. The SBA Expo
honors America’s leading entrepreneurs, and includes the
announcement of the National Small Business Person of the Year.
Special events this year will include a small business expo, a
business matchmaking event, business seminars, a town hall
meeting, and award ceremonies honoring women entrepreneurs and
state and national small business winners. For more information
visit http://www.sba.gov/50.
Do any of these issues affect you? Visit the NASE Legislative
Action Center and “Tell Your
Micro-Business Story.” This will help the NASE understand -
on a personal level - how key legislative issues are affecting
your business and your bottom line.
For more information about any of the articles in
Washington Watch, contact Maureen Petron, NASE public
affairs manager, at (202) 466-2100 or
mpetron@nase.org.
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