Our nation’s tax code is incredibly unfair for America’s 22 million smallest businesses, which include the self-employed and micro-businesses with fewer than 10 employees. The tax code should offer a supportive environment for companies of all sizes.
In fact, it actually deters entrepreneurs from opening their own small businesses and those seeking to grow their businesses.
With nearly 550,000 self-employed and micro-businesses throughout Kansas and Missouri, Congress should consider this important community in any tax reform package.
Small Businesses are Your Neighbors
While America’s larger “small businesses” may include as many as 500 employees, America’s smallest businesses include your neighborhood dentists, delis, accountants and bookstores, operations with only a handful of employees. They represent one of the healthiest economic sectors in America, growing at an average rate of 3.4 percent over the last decade.
Challenges Faced by Small Businesses
But, unfortunately, the small business community faces major hurdles despite its contributions.
For example, the implementation of the proposed health care law means additional taxes that threaten their bottom lines. A lopsided individual and corporate tax structure treats them unfairly during tax time.
And the unresolved spending cuts at the federal level indicate that access to credit and capital will be difficult.
Our nation’s smallest businesses need a level playing field to be competitive. They need a supportive policy environment that fosters the creation of new small businesses and the growth of existing ones.
They Need Our Support
Congress has begun conversations about how to reform the tax code. However, what has been discussed so far has been more lip service than real action. To achieve equity in the tax code for all small businesses, it is important that reform address the important issues of this community.
Any change to the tax code must include key priorities of America’s smallest businesses, including amending the definition of “employee” to include the owner of a sole proprietorship; allowing for the self-employed health deduction to become permanent; and creating a standard Schedule C-EZ deduction by expanding as many standard deductions for business expenses as possible—to name just a few.
We know it can be done; the government recently announced a new, streamlined standard home-office deduction to be implemented next year.
As Congress moves forward with tax reform, it must consider the millions of self-employed across the country. The small business community generates nearly a billion dollars each year, and it is sound economic and tax policy to ensure its interests are included in any meaningful tax reform.