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“Every year, the tax burden becomes more costly for America’s 28 million small businesses. The tax code is increasingly complicated and changes often. Most small businesses spend 40 hours or more preparing their taxes, and four out of ten businesses spend two full workweeks on compliance. That is a high cost in lost time and productivity for a small business. One in three small firms spends $10,000 on compliance. Jobs are still scarce, and the combined burdens of complex taxes and high rates are obstacles to growth. The jobs-stifling tax code is not just a Tax Day problem for small companies, but a year-round burden on their budgets that can impact their entrepreneurial decisions. Small businesses overwhelmingly support sensible reforms for lower rates, simpler preparation and clearer guidelines.”
Last week, the Small Business Committee examined these very challenges for small businesses. The growing number of tax provisions means that owners must spend significant resources on compliance that could otherwise be spent growing their companies. According to the Internal Revenue Service’s own National Taxpayer Advocate, there were over 500 changes to the tax code in 2010 alone, an average of more than one per day. And the steep tax rates mean small firms have less capital to invest back into hiring or expanding.
The National Small Business Association released a survey on April 9, 2014, in conjunction with the testimony of NSBA member Tim Reynolds, a small business executive. The growing complexity of the tax process causes 86 percent of small businesses to pay tax preparers.###
On its website to alert small businesses to burdensome federal regulations, the House Small Business Committee added April 23 the recently proposed rule that would assert Clean Water Act jurisdiction over the nation's waters and wetlands.
The Environmental Protection Agency and the U.S. Army Corps of Engineers jointly proposed a rule, published April 21, that would bring under federal jurisdiction all tributaries of streams, lakes, ponds and impoundments, as well as wetlands that affect the chemical, physical and biological integrity of larger, navigable downstream waters. The agencies plan to accept comment on the proposed rule until July 21.
The Committee started the regulatory alert website, Small Biz Reg Watch, in February 2013 to inform small businesses about pending environmental and other federal regulations and provide them a direct link for submitting comments on such rules.
Since the inception of the website, the focus has expanded from six to 23 regulations that are open for comment, including the EPA's regulations for greenhouse gas emissions, agriculture worker protection from pesticides and performance standards for new residential wood heaters.
The House Small Business Committee April 23 added the recently proposed rule that would clarify Clean Water Act jurisdiction over the nation's waters and wetlands to its website alerting small businesses to burdensome federal regulations.
The Environmental Protection Agency and the U.S. Army Corps of Engineers jointly proposed a rule April 21 that would bring under federal jurisdiction all tributaries of streams, lakes, ponds and impoundments, as well as wetlands that affect the chemical, physical and biological integrity of larger, navigable downstream waters. The agencies are accepting comment on the proposed rule until July 21 (79 Fed. Reg. 2,218; 77 DER A-13, 4/22/14).
“The EPA and Corps are proposing to expand the jurisdiction of the Clean Water Act to include nearly every damp patch of land in the United States,” Committee Chairman Sam Graves (R-Mo.) said in a statement.
Graves termed the proposed rule a “regulatory overreach,” saying this “means small businesses and landowners may need costly permits and face lengthy delays for ordinary activities on private property.”
Small Biz Reg Watch Website
The committee started the regulatory alert website, Small Biz Reg Watch, in February 2013 to inform small businesses of pending environmental and other federal regulations and provide them with a direct link for submitting comments to the committee on such rules (23 DER A-22, 2/4/13).
Since the inception of the Website, the focus has expanded from six to 23 regulations open for comment, including the EPA's regulations for greenhouse gas emissions, agriculture worker protection from pesticides and standards for new residential wood heaters.
The EPA and the Corps are proposing to revise the definition of “waters of the United States” which are those waters subject to the requirements of the CWA. The proposed rule, as currently drafted, will lead to an unprecedented expansion of federal regulatory jurisdiction. Under this expansive proposed rule, all tributaries – even small streams that only flow irregularly or when it rains – and all adjacent waters and wetlands, fall under this definition as federally-controlled waters. This includes small, temporary bodies of water, such as ditches, that may be dry for much of the year. In addition, the agencies could assert CWA jurisdiction over “other waters” on a case-by-case basis.
“The EPA and Corps are proposing to expand the jurisdiction of the Clean Water Act to include nearly every damp patch of land in the United States,” said Chairman Graves. “This regulatory overreach means small businesses and landowners may need costly permits and face lengthy delays for ordinary activities on private property. Projects may need to be redesigned or relocated to satisfy federal regulators. Worse, permit applications may be denied. This extraordinary intrusion into the lives of many farmers, ranchers and small business owners has the likely potential to be economically devastating and must be stopped.”
Through the "Small Biz Reg Watch" initiative, the Committee regularly highlights new agency proposed rules that may have a significant effect on small businesses. The Committee also communicates with small businesses via email and social media when new comment periods begin for select proposed rules that have a significant impact on a wide array of small businesses. The Committee recently changed and upgraded the Reg Watch format to better serve small businesses. That updated website URL is: http://smallbusiness.house.gov/resources/reg-watch.htm.
In his latest bid to boost the federal government’s work with small businesses, Rep. Sam Graves is seeking to hitch a measure to an upcoming must-pass defense policy bill.
The chairman of the House Small Business Committee wants to raise the government’s target percentage for prime contracts awarded to small businesses from 23 percent to 25 percent, or the equivalent of $10 billion in annual new work for small businesses, according to his office.
And he’s asking the House Armed Services Committee to include his measure in this year’s National Defense Authorization Act, according to testimony the Missouri Republican submitted to the committee. The annual defense bill — passed each year for more than half a century — is set to be unveiled later this month.
His measure would also increase the goal for the percentage of subcontracting dollars that go to small businesses to 40 percent from 35.9 percent — but only once subcontracting provisions in last year’s defense authorization bill are carried out.
“Given that the federal government spends over half a trillion dollars each year through contracts, the federal procurement market is incredibly important for small businesses,” Graves said in his testimony.
The numbers remain goals, and the government has regularly come up short in meeting them. Still, the federal government appears to be on track to hit its target for fiscal 2013, The Washington Post reported in February. An official tally is expected later this year.
According to government procurement records, the majority of federal contracts last fiscal year were awarded by the Defense Department, and the top five recipients of federal contracts were defense companies: Lockheed Martin, Boeing, Raytheon, General Dynamics and Science Applications International.
Graves’s proposal, which could cut into the revenues of larger companies, was in the House version of last year’s defense authorization bill but was stripped out in conference committee. Instead, a watered-down version, meant to better enforce existing subcontracting goals, was included.
The bipartisan measure, cosponsored by Reps. Richard Hanna (R-N.Y.) and Patrick Murphy (D-Fla.), is among several small-business provisions Graves is pushing to include in the upcoming defense bill. Another proposal is intended to cut down on contract bundling and ensure those that remain are properly labeled.
“This is one of the most important areas where we can work if we want to help small businesses compete and save taxpayers money,” Graves said.
Members of the House Small Business Committee April 9 made a case to the House Armed Services Committee for using the annual defense authorization bill to increase small firms' access to federal contracting programs.
Small Business Committee Chairman Sam Graves (R-Mo.) was joined by Reps. Richard Hanna (R-N.Y.) and Mike Coffman (R-Colo.) in asking that several recently reported bills be included in the fiscal year 2015 National Defense Authorization Act.
They also asked for room in the defense bill for changes to the Comprehensive Subcontracting Test Program (CSP) if agreement can be reached on legislative improvements to better gauge the status of small business subcontractors.
The Small Business Committee-passed bills that were pitched to the HASC are the:
• Greater Opportunities for Small Business Act (H.R. 4093), which would increase the small business prime contracting goal from 23 percent to 25 percent and small business subcontracting goal from 36 percent to 40 percent;
• Commonsense Construction Contracting Act (H.R. 2751), sponsored Hanna, to prohibit use of reverse auctions when a construction services contract is suitable for award to small businesses, or when the procurement is made using a small business program;
• Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act (H.R. 2882), sponsored by Coffman, to transfer responsibility for verifying the status of service-disabled veteran-owned small businesses from the Department of Veterans Affairs to the Small Business Administration;
• Security in Bonding Act (H.R. 776), also sponsored by Hanna, to increase access of small construction companies to surety bonds; and
• Women's Procurement Program Equalization Act (H.R. 2452), sponsored by ranking member Nydia Velazquez (D-N.Y.), to standardize sole-source authorities among the SBA's procurement programs in order to promote parity.
The bills were approved with bipartisan support and reported out of committee March 5.
The HASC is scheduled to mark up the defense authorization bill May 7.
Combatting Fraud in Contracting Programs
In a related development, Maria Contreras-Sweet, the new SBA administrator, spent part of her second day on the job testifying before the Senate Small Business and Entrepreneurship Committee on the FY 2015 agency budget request.
Contreras-Sweet said she is committed to fighting fraud and abuse in small business contracting programs, particularly size misrepresentation schemes to fraudulently win government work reserved for small firms.
Since 2008, the SBA has suspended and debarred more companies and individuals for abusing SBA programs than in the previous 10 years combined, she said. “Under my leadership, we will have a zero-tolerance policy for these types of abuses.”
Procurement fraud allowing large firms to obtain small business awards is among the significant challenges facing the SBA, Peggy Gustafson, the agency inspector general, told the committee. Gustafson said her office had 88 open government contracting cases, with potential losses of over $2 billion based on the dollar value of the contracts, pending at the end of FY 2013.
The FY 2015 IG budget request will allow the office to continue investigating abuse of SBA contracting assistance programs and join qui tam False Claims Act lawsuits filed by private sector parties alleging fraud in those programs, she said.
The SBA's proposed fiscal year 2015 budget is close to $865 million.
Key Development: Small businesses report that the time and money spent complying with the tax code drags down their bottom line.
Next Steps: Congress works on a tax code overhaul, while a separate bill to renew certain tax breaks advances.
April 9 (BNA) -- A majority of small businesses surveyed recently said that the complexity of the tax code, not the amount of taxes they pay, poses their most significant challenge, according to a study conducted by the National Small Business Association.
More than half of businesses surveyed said they spend more than 40 hours per year dealing with federal taxes. Forty percent reported spending more than 80 hours, or two full work weeks, and more than a quarter of respondents said they spend more than $10,000 a year on accountants or other administrative costs of tax compliance.
In addition, the percentage of small businesses that said they hire a tax professional to prepare their returns ticked up to 86 percent in 2014, up from 84 percent a year earlier. Just 12 percent reported that they handle taxes internally, compared to 15 percent in 2013, the NSBA said.
The survey comes as Congress continues work on legislation to lower tax rates while broadening its base. Many business groups and lawmakers also say the effort should include a simplification of the tax code as well. The House Committee on Small Business held a hearing April 9 on the most pressing tax problems for small businesses.
“Small business owners consistently tell us that 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,” Committee Chairman Sam Graves (R-Mo.) said during his opening statement at the hearing. “All of this means they have little ability to plan with confidence, and less time to grow their companies.”
As a practical matter, the number of businesses filing taxes electronically appears from the survey to be climbing sharply. A total of 3 percent said in 2013 that they filed electronically, and that grew to 23 percent—nearly one in four—in 2014, the study added.
Among tax deductions, the survey revealed that businesses mostly claim tax code Section 179 expensing, the home mortgage interest deduction, the home office deduction and bonus depreciation. Sixty-two percent said the deduction most helpful to stimulating small business growth would be a full deduction for health insurance for the self-employed.
Similar Story in Hearing
In the Small Business Committee hearing, David Kautter, managing director of the Kogod Tax Center at American University, said the two biggest tax challenges facing small businesses are the complexity and the constantly changing nature of the tax code.
“Constantly changing tax law means constantly changing tax filing requirements, which means constantly changing record keeping requirements, which means constantly growing uncertainty, inefficiency and frustration” Kautter said.
Kautter's answer is twofold: a simplified cash method of accounting and a unified tax rate schedule for all businesses.
Under Kautter's simplified cash method of accounting, the derivation of taxable income would be based only on cash actually received or paid during the tax year for businesses with less that $10 million in gross receipts.
Additionally, Kautter suggested that income from all businesses, no matter the type or size, be taxed at the same rates. Currently, businesses organized as sole proprietorship, S corporations and partnerships are taxed at a maximum rate of 39.6 percent, and C corporations are taxed at a maximum individual rate of 35 percent.
Kautter said that it made little sense that the tax rate for unincorporated businesses, which are often small business, are taxed at a higher rate than large C corporations.
Kautter added that he was open to the idea of a graduated tax rate schedule, though one that spanned all types of businesses.
Committee Ranking Member Nydia Velazquez (D-N.Y.) asked the witnesses whether they would support a corporate tax overhaul alone, without touching the individual side, if that were the only option.
Tim Reynolds, president of Tribute Inc. of Hudson, Ohio, an S corporation, said that rewriting only the corporate portion of the tax code would put his small software company at a disadvantage compared to large C corporations.
“If you do just C-corporation reform, what happens then is the companies such as mine lose the many tax incentives that would be struck during that reform, but then ends up not benefiting from the lower rates,” said Reynolds, who is also vice-chairman of the NSBA.
Additionally, Reynolds said many of the dozens of tax breaks that expired at the end of 2013, collectively known as extenders, are critical to many small businesses' bottom line. Some 73 percent of NSBA members use one or more of the extenders, Reynolds said.
Work on renewing extenders continues in Congress, with a floor vote on the Senate floor coming soon (68 DTR G-3, 4/9/14).
Reynolds noted what he called the uncertainty over the expired Section 179 tax extender, which lets business expense the cost of certain acquisitions upfront instead of depreciating over time. It is one of the more popular provisions for small businesses, according to the NSBA study.
More than one in three NSBA members take advantage of Section 179, but relying on the expensing provision can be difficult, Reynolds said.
“The annual termination, change in limits and delay in extensions of this and other tax extenders disrupts this planning, interferes with business efficiency improvements and harms the economy both for buyers and sellers of capital goods,” Reynolds said.
In addition, a new National Small Business Association (NSBA) tax survey was released in conjunction with the testimony of NSBA member Tim Reynolds, a small business executive. The survey shows that a majority of small businesses spend 40 hours preparing to file their taxes, while 40 percent spend a costly two full workweeks on the process. These small businesses say tax complexity and compliance are factors in their day-to-day operation all year long.
The growing number of tax provisions means that small business owners must spend significant resources on compliance that could otherwise be spent growing their companies. Tax complexity is a big problem for small businesses: according to the Internal Revenue Service’s own National Taxpayer Advocate, there were over 500 changes to the tax code in 2010 alone, an average of more than one per day. And high tax rates mean small firms have less capital to invest back into hiring or expanding.
“Tax season is tough on small businesses,” said Chairman Graves. “Taxes are getting more complicated every year, and compliance is a huge drain on their resources. Jobs remain scarce, and the heavy burden of tax compliance is another obstacle to growth. This new NSBA survey of small businesses emphasizes that the complex tax code is not just a problem for Tax Day, but throughout the year. I appreciated the testimony of experienced small business representatives at today’s hearing, and their insights on the concerns of America’s 28 million small business owners.”
Materials from the hearing are available on the Committee’s website HERE.
David Kautter, Managing Director, Kogod Tax Center, Kogod School of Business, American University, Washington, DC, said, “The National Taxpayer Advocate has found that the single most pressing problem encountered by taxpayers, including small businesses, is the complexity of the Internal Revenue Code. The National Taxpayer Advocate estimates that each year small businesses spend approximately 2.5 billion hours complying with tax filing requirements, the equivalent of 1.25 million full-time jobs. According to the National Taxpayer Advocate, more than 70% of all unincorporated businesses (which tend to be small businesses) use paid tax return preparers and spend more than $16 billion for professional advice and compliance assistance from attorneys, accountants and enrolled agents.”
Tim Reynolds, President, Tribute, Inc., Hudson, OH, said, “Approximately 42 percent of NSBA members have fewer than five employees—few, if any of whom is a tax specialist—leaving business owners with no other choice but to hire outside help to keep track of all their additional reporting and filing requirements. In fact, according to the NSBA Small Business Taxation Survey, only 12 percent of small-business owners handle their taxes internally—meaning 86 percent are forced to pay an external accountant or practitioner—this data should send a strong message to the IRS and Congress that the tax code is far too complex.”
Rick Endres, President, The Washington Network, Inc., Alexandria, VA, said, “While I would consider my company to be a true example of a successful small business entrepreneur, I also consider myself to be the prototypical victim of an uneven tax code that is filled with uncertainty, vagueness and unintended consequences for me and other small IT companies. The complexity of the tax code has had a negative impact on both my business growth and my hiring capabilities.”
Donald Marron, Institute Fellow and Director of Economic Policy Initiatives, The Urban Institute, Washington, DC, said, “America’s tax system is needlessly complex, economically harmful, and often unfair. Despite recent revenue gains, it likely will not raise enough money to pay the government’s future bills. The time is thus ripe for wholesale tax reform. Such reform could have far-reaching effects in the economy, including on small businesses.”###
During the hearing, Graves testified, “Recognizing that this is a crucial area for small businesses, over the past three years, the Armed Services Committee and the Small Business Committee have worked together to reduce barriers to entry, create guidance that allows small businesses to compete and facilitates the Department of Defense (DoD) meeting the needs of the warfighter, and ensure that we have a strong small business industrial base.
“…I am here today to support the inclusion of six small business contracting bills in this year’s National Defense Authorization Act.”
Hanna testified, “…there are a few areas where the federal government’s policy on construction contracting hurts small businesses, taxpayers, and the agencies themselves. This is particularly important given the scope of federal construction contracting. Construction and architect & engineering (or, A&E) contracting represent about 1 in every 6 prime contract dollars awarded to small businesses. That was over $17 billion in prime contracts in fiscal year 2012. Therefore, as the Chairman of the Subcommittee on Contracting and the Workforce of the Small Business Committee, I’ve introduced two bills this Congress, and cosponsored a third bill, intended to bring some commonsense reform to this arena.”
Members Requested The Following Legislation Be Included:
1. Greater Opportunities for Small Business Act of 2014 (H.R. 4093) Sponsor: Graves
2. Design Build Efficiency and Jobs Act of 2013 (H.R. 2750) Sponsor: Graves
3. Commonsense Construction Contracting Act of 2013 (H.R. 2751) Sponsor: Hanna
4. Security in Bonding Act (H.R. 776) Sponsor: Hanna
5. Contracting Data and Bundling Accountability Act (H.R. 4094) Sponsor: Graves
6. Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013 (H.R. 2882) Sponsor: Coffman
During the112th Congress and 113th Congress, the Committee has been successful in including its small business legislation in the final NDAAs that were signed into law. The NDAA of 2013 and 2014 incorporated several Committee-sponsored contracting provisions, including making small business procurement goals part of senior agency employee reviews and bonus discussions, preventing contracting fraud by penalizing companies that front for large businesses, and changing limitations on subcontracting to make it easier for small companies to team on larger contracts.
CLICK HERE to watch the video of Graves, Coffman and Hanna during the hearing.###
The Tax Burden For Small Business Is Getting Worse
By Chairman Sam Graves
This time of year is dreaded by small businesses – a time when many companies and individuals are finalizing their tax returns. Today, the Small Business Committee will hold a hearing that will examine the many tax challenges for small businesses. The Committee will explore tax complexity and the high tax burden on small companies, and how they are dealing with these concerns in a tough economy.
Today’s tax code drains precious resources that could be used to grow these companies and create jobs. Unfortunately, the burden on small businesses has actually grown over the last few years.
Because of the “fiscal cliff” deal in January of 2013, when President Obama called for higher taxes, rates are higher for individuals at higher income levels. This translates to higher taxes for many small companies, because a majority of them file their taxes as individuals. The deal also raised taxes on capital gains and the estate tax.
According to the National Federation of Independent Business, 75 percent of businesses are pass-through entities subject to individual income tax rates. These businesses aren’t subject to corporate tax rates but they are subject to individual rates, and the 2013 tax increases created new hardships. The burden of higher rates is compounded by Obamacare, as many small businesses are paying and preparing for new taxes, such as the health insurance tax, the employer mandate tax, the medical device tax, the Medicare tax on investment income, and many others.
One Indiana small business owner, Juanita Melton, commented through Small Business Committee’s interactive website, Small Biz Open Mic, that “…the new ACA will place an undue burden on us as the 3 new "taxes", [Patient-Centered Outcomes Research] ($1 per life), Reinsurance ($65 per life), and HITS (a share of $8 billion dollars in the first year), are levied against us by the insurance carriers. We cannot continue to absorb the increased costs and therefore, will be forced to pass these additional taxes through to our employees increasing the amount they must pay for insurance. What happened to ‘there will be no new taxes and no additional cost’ to implementing the ACA?’”
This growing burden for small companies is a big deal, because it increases the challenges of compliance and reduces the capital needed to grow a business. Small companies create the majority of new jobs in America, so as these businesses face increasing challenges, the economy continues to lag.
Complexity is a burden that shouldn’t be overlooked. According to a new National Small Business Association (NSBA) survey, being released today, tax code complexity remains a significant challenge to small business, with the majority saying they spend more than 40 hours per year dealing with federal taxes. Forty percent report spending in excess of 80 hours – two full work weeks – per year on federal taxes.
Austin, Texas small business owner Ron Gates told us last month through Small Biz Open Mic, “Too many laws and regulations for a small business to manage, particularly the insane federal tax code, causes a small business to spend an inordinate amount of time and money on lawyers and CPAs just to comply with the tax code and prepare annual tax returns -- whether the business is making any money or not.”
The growing number of tax provisions means that small business owners must spend more resources on compliance rather than growing and creating jobs. Over time, our tax code has become more complex and truly temporary, with tax changes being made just one year ahead, for months at a time or even retroactively.
The cost for this compliance headache is nearly three times greater for small firms than big businesses. According to the Internal Revenue Service’s own National Taxpayer Advocate, there were over 500 changes to the tax code in 2010 alone. That’s an average of more than one change per day that small firms are forced to try to manage.
High tax rates also reduce the capital that small companies would invest back into their companies or create jobs. Higher taxes interrupt small business cash flow, especially since they operate with thin profit margins. Small firms need a functional cash flow for their day-to-day operations like wages, benefits, and utilities. The NSBA survey shows that the overwhelming majority of small businesses – 73 percent – say that federal taxes have a significant to moderate impact on the daily operation of their business.
Because of these challenges, the survey confirms overwhelming support – 67 percent – for tax reform that would reduce both corporate and individual tax rates, coupled with a reduction in business and individual deductions. I applaud efforts to advance the tax reform debate in Washington, and I remain hopeful that Washington can tackle this challenge in the future.
Tax complexity and high rates slow our economy. They unfairly punish success and create another time-consuming burden for small companies who would otherwise be devoting those resources to productive use. As the Committee will explore in today’s hearing, creating a tax code that is easier to navigate and promotes growth will benefit small businesses, create jobs and strengthen the economy.
Read the article online HERE.
Tomorrow, the House Small Business Committee will conduct a hearing titled, The Biggest Tax Problems for Small Businesses. The hearing will examine some common tax challenges for small businesses. In addition, a new National Small Business Association survey on tax compliance will be released in conjunction with the testimony of one of its members, Tim Reynolds, President, Tribute, Inc., Hudson, OH.
Here is what small business owners have told the Committee through our interactive website “Small Biz Open Mic” about the impact taxes have had on their companies.
Recognizing the importance of entrepreneurs’ feedback in the process of shaping the very policies that will help determine their business sustainability and growth, Chairman Graves launched Small Biz Open Mic in September of 2011.
On Wednesday, April 9, at 1:00 p.m., the Small Business Committee will conduct a hearing titled The Biggest Tax Problems for Small Businesses. The hearing will examine some common tax challenges for small businesses. In addition, a new National Small Business Association survey on tax compliance will be released on Wednesday in conjunction with the testimony of one of its members, Tim Reynolds, President, Tribute, Inc., Hudson, OH.
The growing number of tax provisions means that small business owners must spend more resources on compliance rather than growing and creating jobs. Tax complexity is a big problem for small businesses: according to the Internal Revenue Service’s own National Taxpayer Advocate, there were over 500 changes to the tax code in 2010 alone, an average of more than one per day. And high tax rates mean small firms have less capital to invest back into their companies or create jobs.
“This time of year is dreaded by small businesses – a time when many companies and individuals are finalizing their tax returns,” said Chairman Graves. “Today’s tax code drains precious resources that could be used to grow a company and create jobs. This hearing will explore tax complexity and the high tax burden for small companies, and how they are dealing with these challenges in a tough economy.”
Wednesday, April 9, 2014, 1:00 p.m. EDT
2360 Rayburn House Office Building
Small Business Committee
The Biggest Tax Problems for Small Businesses
The House Small Business Committee Chairman Sam Graves (R-MO) released the following statement ahead of today’s House vote on the Save American Workers Act (HR 2575):
“The health law’s 30-hour full-time workweek definition is weakening America’s workforce culture and standards,” said Chairman Graves. “We have seen the consequences of this full-time definition take hold and none of it is good for our economy. Not only have small businesses been burdened by requirements that increases their health care costs, but also many workers’ hours have been cut, causing more harm to Americans who can least afford it in an already tough job climate. Small businesses overwhelmingly support the repeal of this definition, and I call on the Senate to take up the Save American Workers Act.”
The Save American Workers Act would repeal the 30-hour definition of full-time employment in the health care law. Small businesses oppose this definition and its implications on the American work culture. Here are a few comments the Committee has received from small business owners:
Steven Hermann, Vice President of Paul's Supermarket, Inc. in Eldon, Missouri, said during the Committee’s October 9, 2013 hearing titled, The Effects of the Health Law's Definitions of Full-Time Employee on Small Businesses, “Employers, such as myself, very much want to continue providing quality benefits to our full-time employees, recognizing that a healthy employee is a productive employee. However, many businesses simply cannot afford to provide coverage to workers who average 30 hours per week. Thus, small business owners will have to make tough choices and many part-time employees will face reduced hours and smaller paychecks."
Rebecca Lloyd, a small business owner from Oneonta, New York, told our Committee last year through our interactive website Small Biz Open Mic, “We need to grow to stay competitive and yet when we grow the consequences of the ACA will financially harm us. We offer health care options to all full time employees (40 hours per week). The ACA will require us to offer benefits to all 30 hour employees as well as all seasonal employees. Our season is 8-9 months. The reduced headcount limits our manufacturing potential and consequently our sales.”
Stephen Bienko, President and Owner of Bienko Enterprises Moving Line in Fairfield, New Jersey, said during the Committee’s October 9, 2013 hearing, “I have offered my full-time team members health coverage even without the employer mandate, and I have every intention of continuing that coverage, even as I continue to expand my business. However, the increased cost of doing business by providing coverage to employees with fluctuating schedules that only occasionally put them into full-time status will leave me no choice but to scale back my expansion plans. Not only has the employer mandate discouraged job creation and business expansion, it has also damaged existing jobs by including a misguided statutory requirement that discarded more than a half-century of established labor policy by now defining “full-time” as 30 hours per week.”
Bitcoins are a form of virtual currency first introduced in 2008 that allows users to exchange value digitally through the Internet. Despite not being backed by a government or holding any intrinsic value of their own, Bitcoins are growing as an alternative payment system. Testimony today provided valuable insight on Bitcoins, their current and future use, and whether small businesses have more to gain or lose by embracing this trend.
“Rapid changes in technology such as Bitcoin can create both opportunities and risks for small business. We want to help small businesses navigate this issue by providing information to help them with these considerations,” said Chairman Graves. “I’m pleased with our thorough discussion of this alternative payment method. Today’s examination of Bitcoin’s potential pitfalls and advantages added to the Committee’s knowledge base, and will inform Congress’s decision-making as virtual currencies are more widely used and come under greater regulatory scrutiny.”
Materials from the hearing are available on the Committee’s website HERE.
Jerry Brito, Senior Research Fellow, Mercatus Center, George Mason University, Arlington, VA, said, “Like the Internet itself, Bitcoin has the potential to be a platform for the kind of permissionless innovation that has driven so much of the growth of our economy. And like all emerging technologies, Bitcoin also presents risks. The challenge for policymakers is to address those risks while doing no harm to the innovative potential of the technology.”
Adam White, Director of Business Development and Sales, Coinbase, San Francisco, CA, said, “Because of the borderless and global nature of Bitcoin, a Bitcoin payment made by customer in New York looks identical to a merchant as a Bitcoin payment made by a customer in London, Buenos Aires, or Tokyo. Moreover, there are no international currency conversion fees associated with Bitcoin payments so merchants can sell low margin items just as profitably abroad as they do domestically. The ability to easily begin accepting payments from customers around the world can open up whole new markets for merchants, and significantly improve top-line revenue.”
Mark T. Williams, Executive-in-Residence/Master Lecturer, Boston University School of Management, Boston, MA, said, “Businesses that are willing to adopt and utilize new technology, such as virtual currencies, may gain a distinct competitive advantage (e.g., cost savings, increased sales) over their competitors. However, blindly adopting technology without understanding the full risk implications can be hazardous to a company’s financial health. Bitcoin is an example of new technology that has clear promise, but also poses a multitude of risks for both businesses and consumers.”
Week Ahead for the Committee: March 31-April 4
Committee to Hold Hearing on Bitcoin Use for Small Businesses
WASHINGTON, DC – The House Small Business Committee, chaired by Rep. Sam Graves (R-MO), today announced the schedule for the week of March 31, 2014:
On Wednesday, April 2, at 1 p.m., the Committee will conduct a hearing titled, Bitcoin: Examining the Benefits and Risks for Small Business.
Bitcoins are a form of virtual currency first introduced in 2008 that allows users to exchange value digitally through the Internet. Despite not being backed by a government or holding any intrinsic value of their own, Bitcoins are growing as an alternative payment system. This hearing will explain what Bitcoins are and examine both the benefits and the risks associated with Bitcoin as a payment system for small businesses.
“Technology is changing fast and that can bring about both risks and benefits for small businesses,” said Chairman Graves. “Bitcoin is a rapidly growing alternative payment method that can be attractive to small firms, but they need to know all the factors involved. The testimony from this hearing will be a valuable resource, not only for small companies, but to Committee members as they consider issues that might arise.”
Wednesday, April 2, 2014, 1:00 p.m. EDT
2360 Rayburn House Office Building
Small Business Committee
Bitcoin: Examining the Benefits and Risks for Small Business
The Small Business Subcommittee on Contracting and Workforce, under the chairmanship of Rep. Richard Hanna (R-NY), today conducted a hearing to examine the impact of burdensome occupational licensing laws on business startups and the economy overall.
As the economy and employment situation remains sluggish, many unemployed and underemployed Americans are considering starting their own business or using a skill or talent to earn an income. However, for many of these workers, potentially costly and burdensome licensing requirements are presenting a significant barrier to economic opportunity.
“During the past five years, economic freedom and entrepreneurial opportunity have declined in America due to burdensome and unnecessary occupational licensing laws,” said Chairman Hanna. “For enterprising and motivated individuals to have every opportunity for economic success, we must repeal licensing laws and regulations that slow growth while serving no true public interest. The stories from today’s hearing demonstrate how these laws are creating barriers to entrepreneurship and putting a damper on competition, innovation, and prosperity.”
Materials from the hearing are available on the Committee’s website HERE.
Melony Armstrong, Owner of Naturally Speaking in Tupelo, MS said, “Every day, hundreds of low-income families are housed because of my work. But I don’t run a shelter. They are clothed through what I’ve done. But I don’t run a second-hand clothing store. They are fed because of what I achieve. But I don’t run a soup kitchen. I have transformed the lives of hundreds of poor women in my state of Mississippi not because I sought out government assistance for them; rather, because I demanded that the government get out of my way so I could provide for myself and for my family, and so other women around me could do likewise in peace, dignity and prosperity.”
Patti Morrow, President of Interior Design Protection Consulting in Greer, SC said, “Two years ago, I moved to South Carolina, and it was déjà vu, all over again. In 2012 and 2013, I had to take time away from my business to drive to Columbia multiple times to speak with legislators and testify at hearings. As of right now, the latest bill has been tabled. But for how long? Licensing this industry is nothing more than restraint of trade and is a job killer.”
Timothy Sandefur, Principal Attorney at Pacific Legal Foundation in Sacramento, CA said, “Sadly, licensing restrictions have been abused for centuries by established businesses as a way to prohibit economic competition, enabling them to raise their prices while barring newcomers from the market. This harms consumers and restricts economic opportunity for precisely those who most need it. While these abuses generally take place at the state level, Congress has authority to protect economic freedom and secure the blessings for economic liberty for all.”
Each year, the Committee examines the SBA’s budget request, and lays out the Committee’s recommendations to allocate taxpayers’ dollars in a way that will improve the performance of the SBA and without diminishing services provided to small businesses. This year, the Committee identified wasteful duplications in SBA operations and recommends correcting that by eliminating $39 million in new spending for unproven and duplicative SBA-created entrepreneurial training initiatives. The Committee also proposes eliminating two outreach offices that provide services available from other government agencies with greater resources resulting in a savings of about $14 million.
“The SBA, and every federal agency, should do their part in finding savings and providing services efficiently so that we can do more to reduce the deficit and get the economy back on track,” said Chairman Graves. “As the Committee’s Views and Estimates show, the SBA can save $50 million by cutting duplication and reallocating resources to proven initiatives rather than spending on costly and unproven SBA-created programs. The SBA should renew their commitment to the services that benefit small businesses the most, and fix or cut that which is failing. Bloated budgets are relics of the past.
“Our nation’s debt crisis is not only a burden on the next generations of Americans, it is a burden on the economy and small businesses now,” Chairman Graves continued. “This is not the time for federal agencies to look for new ways to spend more money. Unproven programs are a luxury the federal government cannot afford. Instead, the SBA should stick to running programs that actually work on Main Street, not ideas concocted inside the beltway; serving America’s job creators; and being the voice for small businesses that this Administration has too often lacked.”
Materials from the markup are available on the Committee’s website HERE.
Views & Estimates Highlights:
• Recommends cutting approximately $50 million below the President’s FY2015 Budget proposal of $864.64 million
1. Recommends eliminating $39 million from SBA-created initiatives for entrepreneurial education and outreach that duplicate current services of other programs.
2. Recommends saving $14 million by eliminating two outreach offices.
3. Recommends other modifications and staff reallocations that could create additional savings.
• Calls for rapid compliance with changes mandated by Congress over the past two years to government contracting programs overseen by the SBA – a process in which the SBA is lagging.
• Recommends reallocating resources for the following priorities:
1. Improve recoveries on defaulted SBA-guaranteed loans
2. Speed up improvements to SBA loan management accounting system
3. Increase SBA personnel assisting small businesses with federal contracts
4. Strengthen Inspector General’s resources to uncover waste, fraud and abuse
5. Preserve SBA core missions and capability to serve small businesses
• Recommends preserving and strengthening access to capital, including an increase in the guaranteed loan program, and maintaining funding for the microloan program
• Recommends increasing funding by $2 million for Small Business Development Centers, funded at $113.625 million in FY2014 and the same amount requested by the SBA in FY2015.###
The Small Business Subcommittee on Health and Technology, under the chairmanship of Rep. Chris Collins (R-NY), today conducted a field hearing in rural New York to discuss the need for expanded broadband access for small businesses.
The Subcommittee examined the strategy and role of the federal government in expanding broadband capabilities to small businesses, specifically in rural communities. Representatives from various Internet providers and the business community testified about wireless spectrum, federal broadband programs, Universal Service Fund reform, and other initiatives of the Federal Communications Commission.
"Small business owners and farmers in rural America can use technology to grow their businesses, but they need broadband Internet access,” said Chairman Collins. “When businesses invest, grow, and hire, whole communities will benefit. Lack of access to broadband is one more roadblock among the many economic challenges rural small businesses have to work hard to overcome. Today, we heard great insights about this problem from both the provider and small business perspectives. We appreciate this testimony to Congress, and look forward to working to remove regulatory and other barriers so that expanded rural access can become a reality.”
Materials from the hearing are available on the Committee’s website HERE.
Mark Meyerhofer, Director, Government Relations of Northeast-Western New York, Time Warner, Lancaster, NY, said, “However, it remains extremely challenging to extend broadband to the most rural areas of NYS, where geographic isolation and topographic issues make it economically infeasible for companies to reach these areas – investment simply cannot be recouped before it is time to reinvest.”
Jill Canfield, Director, Legal & Industry and Assistant General Counsel, NTCA, The Rural Broadband Association, Arlington, VA, said, “While the Regulatory Flexibility Act directs executive agencies to consider more flexible approaches that could save small businesses money without undermining the purpose of regulation, in practice the FCC has been able to get away with minimal adherence to the form of the Act while disregarding its spirit and intent. Greater devotion to the intent of the RFA could direct millions toward investment as small businesses save the costs of battling and eventually complying with poorly drafted rules… The rural industry remains hesitant to invest while it awaits a more predictable and investment friendly replacement for the much derided caps and continues to seek its own broadband-focused fund that supports standalone broadband.”
Kendra Lamb, Owner, Lamb Farms Inc., Oakfield, NY, testifying on behalf of the New York Farm Bureau, said, “It might be hard for some people to imagine, but New York State has some very rural locations and we have large gaps where broadband access is just not available, including here in Western New York. In today’s age, with access to the internet, a small business can operate from anywhere. But similarly, it’s hard to imagine a small business surviving and thriving in a rural area if it cannot be competitive in a world marketplace.”###