NSBA First Vice Chair Testifies on Tax BurdensApril 10, 2014
The House Small Business Committee held a hearing on Wednesday titled: “The Biggest Tax Problems for Small Businesses.” As the Tax Day filing deadline approaches, this was an extremely timely hearing held by Chairman Sam Graves (R-Mo.) and widely attended by committee members as a way to examine the challenges small business faces in complying with the Tax Code.
In Chairman Graves’ opening remarks he commented that small-business owners consistently say they are impacted by higher taxes, new taxes, increasing tax code complexity, uncertainty, and the additional time required to resolve issues with the Internal Revenue Service (IRS). The chairman also cited NSBA’s 2014 Small Business Taxation Survey, as it was released in connection with the hearing. The survey confirms that entrepreneurs are spending scarce resources on federal tax compliance—approximately half (49 percent) are spending $5,000 or more per year on tax compliance—not including tax owed. Forty percent spend more than 80 hours per week dealing with federal taxes, and 86 percent pay an external tax preparer to handle their taxes.
Among the witnesses who testified was NSBA First Vice Chair and owner and President of Tribute, Inc., a software company located in Hudson, Ohio, Tim Reynolds. Mr. Reynolds focused his remarks on two of the major themes that emerged from NSBA’s Taxation Survey; the need for consistency and the importance of predictability. During his statement, he highlighted that the tax code is a patchwork quilt of internally inconsistent and often conflicting measures and objectives.
He emphasized the need for Congress to deal with the more than 55 tax provisions, commonly referred to as “tax extenders” that expired on Dec. 31, 2013. He stated “While most of these tax incentives have been extended several times in recent years it often has been done retroactively and in a rushed manner, leaving many small firms scratching their heads on how to plan for the upcoming year.” Results from the NSBA survey shows that 73 percent of our members use one or more of these incentives. Therefore, by Congress continuing to further delay the extensions, it punishes small businesses work, investment, risk-taking and entrepreneurship.
All those in attendance agreed that complexity, unpredictability and inconsistency within the tax code pose a significant and increasing problem for small businesses. We need a tax code system dedicated to investment, savings and small-business growth.
Please click here to watch Reynolds’ testimony.