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February 23, 2005
NASE Supports Tax Simplification
The NASE supports many changes in the current tax code as the President’s Advisory Panel on Federal Tax Reform held its first meeting last week. This summer the panel will recommend the way to create a simpler and fair tax system.
“Simplifying the tax code will make it easier for the taxpayers to comply with the tax laws, and will restore confidence in the tax system,” said former Sen. John Breaux. Breaux and former Sen. Connie Mack are co-chairs of the bipartisan panel.
“The success of micro-businesses is critical to economic growth in this country,” said Kristie Darien, Executive Director of the NASE legislative office. “The self-employed and micro-business owners need simple tax forms, not a confusing, costly and time-consuming burden.”
The NASE favors simplification of the current tax code and advocates changes in the following areas:
Self-Employment Tax on Health insurance premiums Home Office Deduction Simplification Clarification of Independent Contractor Classification
“Nobody likes paying taxes. But instead of making it as easy as possible, the tax code is an obstacle for those who pay their fair share,” said Mack during the first public meeting.
Many micro-business owners, home-based business owners, and the self-employed prepare their own taxes. The complexity and paperwork burden of the current tax system hinders them from getting all the deductions and returns possible. The NASE implores the tax reform panel to consider the above suggestions as positive changes in the federal tax code for small business owners.
The NASE will continue to fight for a fair tax system for the self-employed and micro-business owners. Let your Members of Congress know how you feel about tax reform through the online Legislative Action Center at http://advocacy.NASE.org.
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House Small Business Democrats and Republicans Quarrel Over Priorities
As mentioned in last week’s Washington Watch, the House Small Business Committee held a hearing titled “Medical Liability Reform: Stopping the Skyrocketing Price of Health Care.” Chairman Don Manzullo (R-Ill.) called the hearing to weigh the growing cost of health insurance in relation to malpractice lawsuits.
President Bush has vowed to work toward “meaningful legal reforms” in areas like malpractice. It is likely that the malpractice issue will be brought to the table during this Congress since changes to class action lawsuit procedure were signed into public law last week after easy passage in both houses of Congress.
The committee’s Ranking Member, Nydia Velazquez (D-N.Y.), voiced strong criticism during the hearing. She questioned the House Small Business Committee’s jurisdiction over the issue of malpractice.
“Of the 45 million Americans without health insurance, 60 percent work for small employers who can’t afford to provide them or their families with health care coverage,” said Manzullo. “Surging medial liability costs are a huge contributor to the problem.”
Additionally, Velazquez criticized Manzullo and other Republican Members for pushing malpractice to the forefront of the Small Business Committee at the expense of the Small Business Administration budget mark up. Initially, the budget discussion was scheduled for the same date and time. Republicans canceled that hearing because of fears that Velazquez and Democrats would call for amendments and a roll call vote for the letter of recommendations sent to the Budget Committee.
“In my entire service on the House Small Business Committee, no Chairman – Democrat or Republican – has ever bypassed the committee’s duties when it comes to evaluating the administration’s budget proposal. This is simply unbelievable,” said Velazquez.
The NASE continues to follow the work of the Small Business Committee closely. For more information and to read the testimony from this hearing, visit the House Small Business Committee Web site at http://wwwc.house.gov/smbiz/.
Debate Over the Estate Tax Continues
The Bush tax cut of 2001 as passed will impact estate taxation until the year 2011. Currently, the first $1 million of estates per individual are exempt for estate tax purposes. In 2009, the exemption level is scheduled to increase to $3.5 million for individuals and by 2010 it will be fully repealed. However, in 2011, the estate tax is scheduled to be reinstated as the tax cuts of 2001 expire.
Reps. Bud Cramer (D-Ala.) and Kenny Hulshof (R-Mo.) introduced the Death Tax Repeal Permanency Act of 2005 (H.R. 8) last week with over 100 co-sponsors. Sen. Jon Kyl (R-Ariz.) has plans to introduce a corresponding bill in the Senate. The bill would fully repeal the estate tax after 2010.
“The death of a family member should not be a taxable event,” said Hulshof during a press conference. Proponents of the bill see the estate tax as a double tax that hurt families when relatives die.
Opponents of the bill claim that sometimes much of an individual’s inheritance had not been taxed previously and hope to compromise with a higher exemption amount rather than full repeal. Studies have also found that charitable giving may experience a serious decline if the estate tax is repealed completely.
The NASE will follow the estate tax debate and the potential effects on the self-employed and micro-business owners. Let your Members of Congress know how you feel about the estate tax through the online Legislative Action Center at http://advocacy.NASE.org.
Now Available: 2005 IRS Tax Calendar for Small Businesses and Self-Employed
The 2005 IRS calendar for small businesses and the self-employed is filled with useful information on general business taxes, IRS & SSA customer assistance, electronic filing and paying options, retirement plans, business publications & forms, common tax filing dates and federal legal holidays. To view the calendar online or order, visit the IRS Web site at http://www.irs.gov/businesses/small/article/0,,id=101169,00.html.
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 Katy Dyer, NASE public affairs associate, at (202) 466-2100 or advocacy@nase.org.
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