U.S. House Small Business Committee Holds Hearing on Tax Relief
The House Committee on Small Business’s Subcommittee on Economic Growth, Tax and Capital Access recently held a hearing titled “Adding to Uncertainty: Small Businesses’ Perspectives on the Tax Cliff.” The hearing examined how the chance for expiration of the 2001 and 2003 tax relief laws are influencing small businesses’ decision making. It also examined where small businesses stand on the Obama administration’s plans to allow the top two marginal tax rates to increase for taxpayers who make more than $200,000 a year or $250,000, if filing jointly.
Opening remarks were made by Rep. Joe Walsh (R-Ill.), subcommittee chairman. Testimony was given by Theresa Kern with MA Steel Erectors in Palos Heights, Ill.; Doug Harmon, CEO of Twin City Die Casting Co. in Minneapolis, Minn.; Scott Hodge, president of The Tax Foundation in Washington, D.C.; and Jeffrey A. Porter of Porter & Associates in Huntington, W.V.
The witness consensus was that the tax cliff was very troubling for small businesses.
According to Harmon: “If we go over the fiscal cliff, jobs will be lost, our company sales will likely decrease, investment will slow, and our nation’s competitiveness will suffer. The president and Congress can prevent this from happening immediately by extending all of the 2001 and 2003 tax rates (including current marginal rates, dividend and capital gains rates, and estate tax relief) for all taxpayers; extend expiring business tax provisions; provide alternative minimum tax (AMT) relief; and find spending cuts to replace a sequestration never intended to go into effect. This would go a long ways to avert America’s impending fiscal cliff.”
Hodge discussed the importance of not raising taxes on small businesses: “As lawmakers consider policies to improve the competitiveness of American businesses, they should not forget that individual income tax rates are just as important to business activity as the corporate rate. The various proposals to raise income taxes on high-income earners, either by increasing the top marginal rate, closing ‘loopholes,’ limiting deductions or implementing a minimum tax, would fall very heavily on America’s non-corporate businesses. These flow-through businesses account for a large percentage of business income and employment in the United States. Raising taxes on them at this time could curtail their hiring and other investment plans, further delaying economic recovery.”
Porter discussed the need for tax reform: “While this subcommittee is examining the impact of the ‘Tax Cliff,’ we also urge you to consider how small businesses could greatly benefit from tax reform. Small businesses and their owners face challenges in making long-term decisions as well as compliance burdens when confronted with confusing, overlapping and inconsistent tax provisions. The AICPA (American Institute of Certified Public Accountants) strongly supports Congress undertaking a comprehensive consideration of tax reform in the upcoming year.” Porter went on to suggest that phase-outs, different definitions of the same term, retirement plan options and inflation adjustments all needed reform.
Please visit ASA’s legislative website at www.TakingThe Hill.com to see witness testimony in its entirety.
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