• Small Banks And Small Biz Grow Together, Study Says
• Micro-Business Sounds Off On Tax Regulations, Tax Gap
• Fuel Standards Bill Progresses From Senate To House
• Democrats Keep Tax Plan Under Wraps

Democrats Keep Tax Plan Under Wraps

Democrats in the House of Representatives are busy concocting a tax agenda to be unveiled this summer. In particular, they are working to reconfigure the alternative minimum tax (AMT) which, according to the Congressional Budget Office, will apply to about one-fifth of taxpayers by 2010. The AMT was created to prevent wealthier taxpayers from using loopholes to avoid paying any tax. However, since the tax rate was not fixed for inflation, it affects more Americans each year. Rep. Richard D. Neal, D-Mass., one plan would disallow from paying the AMT couples with an annual salary of $250,000 or less. Households that earn more annually will be subject to the tax at varying rates. It would also increase the child tax credit, earned income tax credit, and the standard deduction.

Fuel Standards Bill Progresses From Senate To House The Senate Committee on Commerce, Science and Transportation has approved legislation designed to raise fuel efficiency standards for all passenger vehicles and light trucks from 25 to 35 miles per gallon, depending on vehicle class and weight. Democrat Senator Feinstein of California introduced the original bill, which was then amended to include tougher Corporate Average Fuel Economy (CAFE) standards. The new bill will also require medium- and heavy-duty trucks to improve standards by four percent each year. In addition, it requires trucks of all size and weight classes to increase fuel economy by four more percent after 2020. “This bill would also target two major policy concerns: limiting our nation’s energy consumption and reducing our carbon footprint,” Senator Feinstein said. “Specifically, by 2025, it would reduce oil consumption by 2.1 million barrels per day, which is roughly the amount of oil imported by the United States today.” The Secretary of Transportation will continue to decide how these averages will be measured. Currently, benchmarks are set at about 28 miles per gallon for passenger vehicles and 21 miles per gallon for light trucks.   Small Banks And Small Biz Grow Together, Study Says   Small publicly held banks are considered more valuable if they participate in relationship lending with small firms, according to a recent study by the Office of Advocacy of the U.S. Small Business Administration. The report studied more than 800 publicly-held banking companies over the span of 11 years, beginning in 1995, and sought to shed light upon the connection between market valuation and small business lending. The study points out that many small firms have little or no collateral and younger firms do not have a credit history on which to base banking decisions. These results mirror a recent NASE online member poll, which found that the largest obstacles entrepreneurs face in gaining access to capital is their credit rating (26.2 percent) and a lack of collateral (21.5 percent). Researchers say, however, that this type of lending relies on an increase in community and business relations and requires an investment by the bank of costly information acquisition and processing as well as the monitoring of firm activities. Costs are often passed on to customers in the form of higher fees and interest rates. For more information and a complete copy of the study, visit the Office of Advocacy at www.sba.gov/advo. Micro-Business Sound Off On Tax Regulations, Tax Gap Micro-businesses are looking to Congress to help simplify their tax filing process without making it more burdensome, according to a recent online poll by the National Association for the Self-Employed (NASE). One-third identify the simplification of tax forms and regulations as the issue most important to them. Sixty-four percent say they either somewhat or vaguely comprehend the IRS reporting requirements affecting their business. Business owners also spoke up about the $353 billion tax gap and Congress’ efforts to narrow it. Thirty-five percent cite as the most harmful plan the creation of a voluntary withholding system that would require businesses to withhold a flat-rate percentage of gross payments at the request of a contractor. A quarter say that requiring businesses to obtain an accurate, certified Taxpayer Identification Number (TIN) from all contractors and to verify those numbers with the IRS is the least burdensome proposal. “Micro-businesses don’t have a full-time accountant or a human resources department,” says Kristie Darien, executive director of the legislative office. “They have to handle all business functions on their own, on top of trying to run a successful business. Tax proposals that seek to add cumbersome regulations and paperwork will only hurt the self-employed and our nation's economy in the long run.” For the full results of the survey, visit http://advocacy.nase.org/membersurvey/default.asp. Do any of these issues affect you? Visit the NASE in 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 Kristin Oberlander, NASE public affairs associate, at (202) 466-2100 or koberlander@nase.org.