July 26, 2006
- NASE Members Say Home Office Tax Deduction Too Difficult to Take
- Congress Debates Price Transparency in the Health Care Sector
- Minimum Wage Increase in the Works?
- Member Poll: Immigration Reform
NASE Members Say Home Office Tax Deduction Too Difficult to Take
Over 60 percent of micro-business owners working from home do not take the home office tax deduction, because it is too onerous or rigid to benefit from, according to a recent member poll conducted via e-mail by the NASE. Fear of an Internal Revenue Service (IRS) audit was cited as a reason why 45 percent of respondents did not claim the legitimate deduction.
“The NASE continues the fight for a simpler, fairer home office deduction, by working with Congress and the IRS,” said Keith Hall, the NASE’s national tax advisor. “Until that happens, it is important for micro-businesses to take all the tax deductions due to them.
“It is unfortunate that micro-business owners fear an IRS audit because, as a CPA, it is my strong belief that taking the home office deduction does not, in fact, red flag micro-business owners for audit,” said Hall.
Thirty-nine percent of respondents who did not take the home office deduction said the paperwork required is too burdensome and time consuming. One-third of those who did not take it said the criteria to qualify for the deduction are too rigid.
Micro-business owners were split on just one solution to the problem. Forty-four percent of all respondents said Congress should enact a standard deduction for a set amount while 42 percent said Congress should make the criteria for qualifying less stringent.
The NASE supports both simplifications of the current home office deduction forms as well as the proposal for a $2,500 standard home office deduction. With a standard deduction, micro-business owners would still have to fulfill the IRS’s requirements for the deduction. But instead of spending hours completing complicated tax forms, they could opt for a flat-rate deduction.
Of those respondents who do not currently take the home office deduction, 68 percent said they would do so if the option of a standard, flat-rate home office deduction of $2,500 was offered. Of those who do currently take it, 56 percent said they would rather take the proposed standard deduction than do all of the paperwork currently involved.
“The numbers here are clear. With a simpler, standard deduction option, more micro-business owners would be taking a tax deduction that they rightfully deserve,” said Hall. “We need to help this vital segment of the economy to help it flourish.”
The U.S. Small Business Administration reports that 53 percent of the small businesses in this country are home based and generate $102 billion in annual revenue. Forty-eight percent of the NASE Membership is home-based.
For more information on the NASE’s legislative priorities, visit http://advocacy.NASE.org.
Methodology:
The survey was e-mailed to NASE Members in April. Over 3,000 NASE Members completed the survey.
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Congress Debates Price Transparency in the Health Care Sector
Last week the Health Subcommittee of the House Committee on Ways and Means, led by Rep. Nancy Johnson, R-Conn., and Rep. Pete Stark, D-Calif., held a hearing to discuss the issue of price transparency in the health care sector. Witnesses from academia, think tanks, associations and major insurance companies testified and submitted remarks on the role of price transparency and its importance to health care consumers.
Proponents of transparency feel that increased awareness of prices will lead to lower costs in our health care system. Opponents believe transparency will not address escalating health insurance costs and the larger issue of the uninsured. The NASE supports price transparency and the ability of health care consumers to have key information on costs of treatments and medicines as well as on the quality of hospitals and doctors.
“Transparency in our health care system is essential,” said executive director Kristie Darien. “When people know what health care actually costs, they can make more educated choices, leading to greater competition among health care and insurance industries, and lower costs and improved care for everyone.”
The Bush Administration has included price transparency in their proposal to reform health care. President Bush has directed Medicare and the Federal Employees Health Benefits program to demonstrate leadership in making price and quality information available.
Go to NASE’s Tell Your Story section http://advocacy.nase.org/Issues/issues.asp and tell us if you think of incorporating price transparency in our health care system.
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Minimum Wage Increase in the Works?
Congress is considering a minimum wage raise again this year, as several attempts over the last few years and six attempts in the past year alone have failed. The last minimum wage increase was in 1996, when President Clinton signed the Small Business Job Protection Act into law. Democrats feel that this could be an important issue to mobilize their base during midterm elections.
Proponents of the increase argue that an increase in the minimum wage will lift many low income workers out of poverty. They say that this increase in income will also benefit the economy because those workers will have more money to spend on things other than bare necessities.
Opponents contend, however, that raising the minimum wage will force businesses to cut jobs and hire fewer people – jeopardizing the business and eventually causing economic recession. They also say that since most workers who start at minimum wage do not stay at that rate, a minimum wage increase will remove an important opportunity for training and advancement.
Many states have already enacted their own minimum wage increases. As of now, 23 states and Washington D.C. have passed minimum wage laws that set their rates higher than the federal level. Currently, the highest minimum wage rate is in the state of Washington at $7.63 an hour. Legislation passed in Massachusetts now awaiting the governor’s signature would raise the minimum wage to $8.00 an hour.
The Pew Research Center for the People and the Press published a study in April finding that 83 percent of Americans support a minimum wage increase of $2. The Economic Policy Institute estimates that increase would benefit almost 15 million workers.
Almost two dozen House Republicans have developed a compromise bill (H.R. 525) which they hope would reduce the effects of the minimum wage increase on employers. It would do this by making it easier for small companies to group together to buy health insurance for their employees in ways similar to previous small business health plan (formerly association health plan) legislation and other tax breaks.
However, House Republican leadership seems unwilling to schedule a vote on the bill, and it is unclear how House Democrats will react to HR 525. The NASE will continue to follow this issue. Let your legislators know how you feel about a minimum wage increase by visiting the NASE’s online Legislative Action Center at http://advocacy.NASE.org.
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Member Poll: Contributing to the Community
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The self-employed and micro-businesses play a vital part in America’s communities. Many micro-businesses support local youth leagues, charities and other community efforts. Let the NASE know how you contribute to your community by visiting the MyNASE Web site at http://my.NASE.org/. Log in to your free MyNASE Web account. If you have not set up an account, you can do so at http://my.NASE.org/ with your member number.
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