Washington Watch - September 22, 2010


Washington Watch - September 22, 2010

NASE: Lawmakers Finally Act to Help Main Street

The National Association for the Self-Employed (NASE) applauds the Senate in their passage of the Small Business Jobs and Credit Act of 2010 (H.R. 5297). In an era where the self-employed and micro-businesses (fewer than 10 employees) have grown faster than any business type, yet receive the least recognition and support from the federal government, this bill is a key first step in providing tax and access to capital relief for America’s smallest businesses.

A key victory and top legislative priority for the NASE for the past decade, is the inclusion of a one-year deduction for sole proprietors on health care costs for payroll tax purposes on their 2010 tax returns. Currently, the self-employed pay an additional 15.3% (self-employment) tax on their health insurance premium costs since they are unable to deduct those costs as a business expense. No other business entity pays additional taxes of this nature.

"Self-employed Americans have finally received some bottom-line relief in this difficult economic climate with the passage of the Small Business Jobs and Credit Act,” remarked Kristie Arslan, executive director of the NASE. “We hope that this legislation symbolizes that lawmakers are starting to pay attention to the needs of the self-employed, which represent 78% of all small businesses in the U.S."

Other key provisions in the bill that will assist the self-employed include:

  • A temporary increase in the maximum deduction for business start-up expenditures in 2010 and 2011 from $5,000 to $10,000, subject to a $60K threshold
  • Extends the Sec. 179 expensing provision that allows small businesses to immediately expense up to $500,000 (up from $250,000) for tangible personal property and up to $250,000 for improvements to leasehold property and retail property
  • Creation of a $30 billion Small Business Lending Fund to encourage small local banks and credit unions to increase loans to small businesses

The bill will now head back to the House of Representatives for a final vote which is likely to occur this week.  Speaker Pelosi has indicated a willingnes to forgo a lengthy conference debate and have the House vote on the Senate-passed version of the Small Business Jobs Act.  

Despite excitement over H.R. 5297’s movement through the Senate, the NASE hopes to see Congress address the increased Form 1099 reporting requirement passed under the health care law prior to the end of this legislative session, as well as the extension of the individual income tax rates.

NASE Members Attend Obama Town Hall Meeting

On Monday, a group of NASE Members attended a town hall-style meeting with President Obama, hosted by the cable news network, CNBC. The president mentioned small business often throughout the hour, but spent the majority of his time addressing concerns on the economy, Bush tax cuts and recent business tax cuts.

Read the town hall full transcript here. Read CNBC's analysis of the event here.

NASE Member comments on the event and the message:

  • Gwen Moulton of GM Authoring Services in Maryland - The President's message that the economy has stablized is good news, but we need the federal government to focus more on the self-employed, micro-business, and small business community to be sure we continue to thrive as the economy recovers further. I was especially hoping to hear about incentives for community-based small businesses in the renewable energy and sustainability sectors since they offer a potential boon for the self-employed and micro-businesses. Instead, the President tended to address the concerns of larger businesses, Wall Street, and the financial industry. Nonetheless, it was a great experience and a pleasure meeting some of my fellow NASE members.
  • Chris Stelzig of Zignatures, Inc. in Maryland - On a personal note, I thought that this kind of event is JUST what the country needs more of. We need our commander in chief out in front on the economy, jobs, growth, taxes, etc. Whether you agree or disagree with his policies, most of us want someone to lead. I support Obama and agree 100% that this economic hole we are in was (a) not his creation, (b) will not be a quick fix. The US economy is the proverbial battleship and does not turn on a dime. All too often we get wrapped up in our own self-interests. “How does this help me?” we ask. Instead, shouldn’t we be asking “how does this help us all?” We are one nation, and if we’re to remain as such, we need to act in national self-interests, not personal ones. (I’ve got a hundred cliché’s I can throw in here, like the chain being only as strong as the weakest link, etc) but let’s just leave it at this – the more we act in the common good, the better it is for all.
  • Kimberly Gladis of CorePerformX Advisory Group in Maryland - Bottom line is that people in America are going to need to adjust to a new reality.  The state of our country is a result of 10 years of destruction and it can not be fixed overnight. Regardless of who took office this past term, he/she would have been faced with the same dilemma, and choices have to be made. Those choices will not be popular with everyone, but people need to look at it objectively and trust that there are a lot of smart people working with President Obama and his team to make the best decisions possible. As President Obama said, “The numbers just don’t work.” So people are going to need to make tradeoffs for the good of our country if we hope to recover, and then accept a new equilibrium as reality.  The American dream is not dead, it is different. And change is not a bad thing.

Arslan: Congress Can Rev Up Engine Of Economy

This piece appeared as an Op-Ed in the Washington, DC-area publication, Roll Call (subscription). Find the full article there.

Conventional wisdom used to hold that what’s good for General Motors is good for the country. While an American automaker may no longer be the face of our economy, our economic and employment policy often blindly assumes that large employers are the primary drivers of growth.

Congress is in a position to deliver real relief to a segment of our economy that can help reverse recent dismal economic trends and begin to deliver meaningful growth, both in terms of revenue and employment. The self-employed are counting on lawmakers to deliver on a critical piece of legislation: the Small Business Jobs Act.

For small businesses, relief cannot come soon enough. These businesses need help to survive the lingering economic recession and to begin to thrive in an economic recovery.

With the rising cost of health care, the self-employed must be allowed to take a one-year business deduction for their health care costs. Currently, sole proprietors are unable to deduct their health insurance costs as a business expense, meaning they pay more in payroll taxes than any other type of business. While a one-year reprieve on an inequity in the tax code may seem like lip service, it is an important first step in leveling the playing field.

Another priority is giving self-employed business owners the option to take a standard home office deduction. Since more than half of small businesses are run out the home, this deduction is an important tax benefit for a huge number of small businesses. Unfortunately, taking this benefit is so complex and requires such a significant amount of paperwork that most qualifying business owners forgo the relief to which they are entitled.

While failing to meaningfully lower health costs for small businesses, the recent health care reform measure also created a monstrous paperwork burden for the self-employed. While ostensibly an expansion of an existing reporting requirement, the new law requires every business to issue a Form 1099 to vendors that it pays more than $600 during a tax year for goods and services. A typical self-employed business that issues two or three Form 1099s a year would now be facing two dozen or more, largely for basic business expenses such as hotel stays, high-speed Internet service and inventory.

Businesses need capital to grow. Small businesses would benefit if small banks, credit unions and other small lenders get an infusion of capital to make loans to those who need it. A $30 billion lending fund would help the self-employed who have been forced by the credit freeze to dip into their families’ savings or rely on personal credit cards to keep their businesses afloat.

After Senate passage last week, the Small Business Jobs Act returns to the House for its approval. The House must act quickly and decisively to ensure America’s small-business community gets the relief it so desperately needs.

As Congress resumes its work, it is critical that it specifically addresses the concerns of America’s self-employed and micro-businesses. They are and will continue to be the engine of the economy. Instead of more for Wall Street, now is the time for Main Street to put our economy back in the fast lane.

Washington Watch Online

Visit NASE Advocacy to view archived editions of Washington Watch. While you’re there, read the latest updates from the Washington, D.C. office, write your Congressperson, and find out how you can join the fight for micro-business.

Courtesy of NASE.org