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How Does Small-Business Legislation Measure Up?
Read this article in PDF form here.
An NASE Analysis
By Kristie Arslan
Recently, the NASE was asked by the Senate Committee on Small Business and Entrepreneurship about how the effects of the Small Business Jobs Act, signed into law last fall, have been felt by the self-employed community.
Any time the NASE is invited to an event like this, we get excited about the chance to review how a particular piece of legislation has or will, according to our studies, affect business owners’ everyday lives. In this instance, I was happy to be allowed to speak before Congress on one of the most targeted pieces of small-business legislation that we have encountered.
The Small Business Jobs Act of 2010 included key provisions that benefited the vast majority of micro-businesses and provided some much needed bottom-line tax savings to the self-employed.
For some time, the NASE has complained that a lot of legislation aimed at helping small businesses actually ends up helping a small minority of larger small businesses. Rather, we suggest that lawmakers target legislation to the majority of the nation’s small businesses, which are made up of self-employed businesses and those with 10 or fewer employees.
In my testimony, I reminded the committee about the Jobs Act provision that we supported most strongly—the one-year deduction on health insurance costs for payroll tax purposes. This is a deduction that the NASE has been working on for over a decade in Washington, D.C.
Sole proprietors should permanently have the option of this tax benefit, since they are the only business entity that ordinarily does not receive it. Though aware that Congress is currently leery of permanently adding any additional monies to the national debt, we believe that at a minimum this deduction should be extended for a two-year period.
Another provision that the NASE supports is the increase in the deduction for startup costs for new businesses. As part of the Jobs Act, the deduction was increased from $5,000 to $10,000.
Every business owner knows that unexpected costs always pop up during the founding of a new venture. Further, small businesses account for 64 percent of net new jobs created. As the nation’s economy continues to rebuild itself on the backs of entrepreneurs, we believe this deduction should be made permanent.
We also let members of Congress know about proposals in the law that haven’t proved as fruitful as imagined. For example, the Small Business Lending Fund was supposed to open up avenues for community banks, credit unions and community development funds to lend to small businesses in a way that larger banks have failed.
Unfortunately, the promised federal money still has not reached these institutions, making access to capital harder than ever for small firms. We encouraged the administration to move more quickly on putting this program in place, as it has already been several months since the Jobs Act became law.
If you want to join the NASE in voicing your opinion to legislators in Washington, D.C., contact your representatives in Congress by visiting our Legislative Action Center.
Kristie L. Arslan is the Executive Director of the NASE and manages the NASE legislative affairs program in the association's Washington, D.C. office. You can contact Arslan at advocacy@NASE.org.
Read this article in PDF form here.