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Washington Watch - April 6, 2011

Form 1099 Law Repeal Heads To President Obama For Signature

Kristie Arslan, Executive Director of the NASE, released the following statement after the U.S. Senate’s vote to repeal the IRS tax reporting requirement:

“With the Senate’s action today, America’s smallest businesses – the self-employed and micro-businesses – have averted a harmful regulation that would have left them facing massive paperwork burdens,” said Arslan. “The expanded 1099 reporting requirement would have hurt small businesses that are already struggling to keep their doors open. The small business community encourages President Obama to sign this important piece of legislation into law and also to remember that there are additional small policy fixes that will further help small businesses stay competitive, such as making the temporary self-employed tax deduction permanent to level the playing field with their larger counterparts.”

In addition to the IRS Form 1099 issue, NASE and other small business advocates have been fighting to make this year’s temporary self-employed health insurance tax deduction permanent. While every other type of business, including corporations and partnerships, can write off the cost of health coverage as a business expense, the nation’s smallest businesses were only granted a one-year opportunity. Kristie argues this point in her latest Huffington Post blog piece. A recent column in USA TODAY highlights the benefits of this deduction to small businesses.

House GOP Unveils $6 Trillion In Cuts For 2012 Budget

House Republicans, lead by Rep. Paul Ryan (R-Wis.), this week proposed a reorganization of Medicare and Medicaid as part of $6 trillion in spending cuts for the next fiscal year budget. The cuts would occur over the next decade, with the plan also lowering the top income tax rate for individuals at 25 percent (currently 35%).

As a note, President Obama’s fiscal 2012 budget proposal called for $3.7 trillion in spending for next year, whereas Ryan's plan cuts $200 billion from that projection.

For additional a summary plan or the full report, as well as video and other detail, visit the website of the House Committee on the Budget here.

NASE National Tax Advisor Featured In USA TODAY

Keith Hall, National Tax Adviser for the NASE, says the new self-employment tax deduction provided to sole-proprietors this year addresses an inequity in the way health insurance is taxed. Employers are allowed to deduct their health insurance costs as a business expense, thus lowering the amount they pay in payroll taxes. Meanwhile, employees who have employer-provided health insurance can pay their share of the premiums with pre-tax dollars, Hall says. "For the first time, we are on the same basis for deductibility as everybody else."

"We talk over and over again about access to health care, but the biggest issue for small-business people is affordability," Hall says. "This is a 15.3% savings on the cost of health insurance premiums."

Read the entire article by Sandra Block here.

House Holds Hearing On Regulatory Flexibility Act Effect On Small Biz

The House Small Business Committee recently held a hearing to examine how federal agencies are ignoring important requirements in the Regulatory Flexibility Act (RFA). The failure of agencies to abide by the RFA has placed an enormous burden on small businesses.

“We have the Regulatory Flexibility Act for a reason— and federal agencies should be following it and held accountable for their actions,” said Chairman Sam Graves (R-Mo.). “Following some statutes and ignoring others is not an option."

The RFA charges all federal agencies with examining the impact of their proposed and final rules on small businesses. If those impacts are significant, the agency is required to consider less burdensome alternatives.

In February, Graves introduced the Small Business Size Standard Flexibility Act of 2011 (H.R. 585) and also joined with House Judiciary Chairman Lamar Smith (R-Texas) to introduce the Regulatory Flexibility Improvements Act of 2011 (H.R. 527). Both pieces of legislation strengthen the RFA to, among other things, ensure that regulations take into account the direct and indirect effects on small businesses before implementing them.

To read witness testimony and view related hearing documents, click here.

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