Small businesses are struggling during these tough times, and are looking to lawmakers for smart policies that will help boost the economy. In addition to specific legislation aimed at helping small employers, such as the Jobs and Credit Act and healthcare reform, small firms need legislation focused on helping the majority of Americans, who make up small business owners’ customer base. The compromise tax package passed by Congress and signed into law by the president last week aims to do just that, which is good news for small businesses and the American people. It also allows us to move on to other pressing issues affecting small businesses.
Like most compromises, though, the deal was not perfect. Part of the compromise included extending tax cuts for the upper income brackets—those with taxable incomes of $250,000 or more—and a debate raged about whether this would have an adverse effect on small businesses. The claim that small businesses would be hurt if taxes on the top earners increased is misguided. Fewer than 3% of small business owners earn more than $250,000 a year, and the bulk of small employers across the country wouldn’t benefit from tax breaks on the rich.
Despite the disagreement, however, there are numerous provisions in the package that are valuable to small businesses in this fragile economy. Take, for example, the extension of research and development tax credits. This critical component will incentivize and reward companies that create new technologies and keep jobs here at home. Perhaps most important, the two year payroll tax reduction, coupled with the extension of unemployment benefits and middle class tax cuts, will put more money into the hands of American consumers, which in the end boosts small businesses’ bottom lines.
Small businesses are the lifeblood of our economy. Bipartisan measures like the tax cut package will help small businesses weather this economic storm and increase both revenues and job creation.
The new healthcare law has many benefits for small businesses: tax credits, state healthcare exchanges, cost containment and grants for businesses starting wellness programs, among others. Yet the 1099 reporting requirement provision of the Patient Protection and Affordable Care Act, which has nothing to do with healthcare reform, is not one of them. Small business owners around the country, along with organizations on both ends of the political spectrum are worried, and for good reason. If this provision isn’t fixed before it takes effect in 2012, millions of small businesses will be burdened with unnecessary paperwork that they don’t have the time or resources to deal with.
Under the 1099 provision, small businesses will be required to file a 1099 form with the IRS for the purchase of any goods and services over $600. This will require small business owners spend time filling out forms instead of focusing on running their businesses. For months, Small Business Majority has urged Congress to swiftly fix this provision. As a consequence of their inaction, the small business community has been bogged down in trying to resolve the 1099 issue, when it should be focused on educating small businesses about the benefits of the law and how to take full advantage of them. This does no good to the countless employers who need the kind of relief the healthcare law will provide.
In an economy where time means money, small businesses can’t afford more delays from Congress—they need action. Legislators on both sides of the aisle agree this provision needs to be removed from the law, and taking out the 1099 reporting requirement would be a bipartisan victory for lawmakers and a triumph for America’s 28 million small businesses. It’s time for Congress to come together and rectify this problem. Once this happens, we can begin implementing the Affordable Care Act and concentrate on small business owner’s No. 1 priority—bringing down the high cost of health insurance.
Add your name to the growing list of people in the small business community who are demanding congressional action as soon as possible.
Sign onto a letter urging Congress to put this issue to rest now.