U.S. Rep. Charles Rangel (D-N.Y), the chairman of the U.S. House Ways and Means Committee, recently said he was willing to consider reducing tax rates on America’s corporations to help them remain competitive in a global economy.
He also said he was willing to work with Treasury Secretary Henry Paulson on ideas from the administration, including reducing the top corporate rate from 35 percent to 27 percent.
We applaud Chairman Rangel’s comments, as well as his willingness to work in a bipartisan fashion, as we firmly believe that America must remain competitive. But if we want to help all of our country’s businesses, not just the largest corporations, here are some of the things that Congress can do for the heart of our country’s economy, the creators of most of our new jobs – America’s small businesses.
- Chairman Rangel’s plan targets large corporations, those that file taxes as C-corporations. However, most small businesses file as S-corporations, which pay the same tax rates as individuals. Tax relief for small entrepreneurs is just as vital to our economy and America’s competitiveness as relief for large corporations.
- Complex, unclear tax rules force small businesses to spend millions each year on professional tax help, money that can’t be put back into their business. In addition, even honest, compliant taxpayers make mistakes when filling out their tax forms. These mistakes add to the estimated billions of dollars lost each year to the U.S. Treasury. Simplifying the tax code will help to solve both problems.
- Entrepreneurs are treated differently than Americans who receive their health care benefits from a corporation. The tax code prevents them from deducting health-care costs from their wage base for self-employment taxes. They’re forced to pay additional taxes simply because they’re self-employed. This tax bias should be eliminated.
- A permanent increase in Section 179 expensing limits, which are set to expire in 2010, would allow small firms to expense additional investments. This is a proven strategy that enables those businesses to grow, create new jobs and expand the tax base, increasing revenues to the government.
- Permanent repeal of the federal estate tax will enable small-business owners to plan for the future with certainty, including how to pass their business to the next generation without worrying about selling assets to pay for it.
Small firms with fewer than 500 employees represent 99.9 percent of the 26.8 million businesses in the country, both large and small. If America’s small business were a separate economy, it would be the world’s third-largest, trailing only the United States as a whole and Japan.
In addition, according to the U.S. Small Business Administration, small businesses account for about two-thirds of all net new jobs created in recent years, while every day we read about large corporate layoffs.
Small business in America is alive and well. Let’s make sure that we don’t forget that, and that Congress does what it needs to do to ensure that this critical portion of our economy stays healthy and growing.
Todd Stottlemyer is president and chief executive officer of the National Federation of Independent Business (NFIB)in Washington, D.C.
