Posted by Kristie Arslan - Congress has important work to
finish before the 111th Congress comes to a close. Much of its agenda
includes priorities that are critical to the nation's smallest
businesses. While the recent passage of the Small Business Jobs Act was a
major accomplishment, small businesses also need relief from onerous
paperwork burdens created by the IRS Form 1099 expansion provision
hidden deep within the health care reform legislation, as well as
resolution of a suite of tax issues, including the Alternative Minimum
Tax (AMT), the estate tax and the Bush-era tax cuts.
Much of the
political posturing over the Bush-era tax cuts focuses on how much money
one earns - either below the $250,000 threshold or above it. The tax
cut debate gets bogged down about whether the individuals who benefit
from the tax cuts are middle-class or ultra-wealthy. What's missing from
this discussion is the fact that 23 million of these individual
taxpayers are something else, too: they are business owners. While
Congressional leaders -- and the White House -- debate the merits of who
deserves these tax cuts, self-employed business owners are depending on
this extension for their businesses' very survival.
Seventy-eight
percent of small businesses are self-employed and they collectively
contribute close to a trillion dollars to our economy every year.
Contrary to government policy that often regards them as home-based
"hobby" businesses, the self-employed have real jobs in fields like
finance, real estate, manufacturing and health care. They aren't simply
sitting at home in their pajamas and bunny slippers. They support their
families and their communities. And they create job opportunities and
spur economic growth when they are thriving.
Unfortunately, the
current economic climate has made the outlook for many self-employed
businesses uncertain. Many if not most are just trying to stay afloat
until the economic recovery translates into increased sales and business
growth. The smallest challenge -- from a new paperwork requirement to a
higher health insurance premium -- can push a self-employed business
from the edge to oblivion.
A higher tax bill come April 15th is
no exception. The average self-employed business owner makes about
$87,000 per year. By letting the Bush-era tax cuts expire, this average
business owner will see his or her tax liability increase by about
$2,100. This may be small change to a large corporation, but to a small
business $2,100 could represent the cost of purchasing new accounting
software, advertising their business online or paying their phone bill.
It could also be used to hire extra help during the holidays or pay a
health insurance deductible.
Small businesses are used to narrow
margins, but the fact is some won't survive a tax hike. While lower
taxes means less in the Treasury, what the economy would gain by curbing
the national debt could be negated by lost small business growth and
job creation opportunities. Raising the debt ceiling in a period of
fiscal uncertainly without doubt requires serious consideration, but so
should our policies to support the nation's current and future
entrepreneurs.
Creating a job of your own by choosing to be
self-employed is just as important and valuable to the economy as being
hired to perform an office or factory job. Self-employment deserves to
be supported in the same way policymakers support those segments of the
economy that spend millions on lobbying and campaign contributions. In
these times of economic uncertainty, pulling the rug out from under them
by raising their taxes could be devastating.
While a permanent
extension of the Bush tax cuts is preferred, the compromise between
President Obama and Congressional leaders ensures that the small
business community will remain on the road to recovery. Congress must
move forward with policies that will help fuel the engine of economic
growth -- America's small businesses.