7 Tax Reform Proposals Small Businesses Would Support

Small, medium and large businesses do share some tax concerns after all. While small businesses may often focus on payroll taxes and bigger businesses seem to be primarily concerned with business income tax, seven of 15 potential tax reform proposals currently on the table appeal to businesses regardless of size. Those findings, according to a new survey of business advisers released by American University's Kogod Tax Center and Bloomberg BNA, may indicate widespread support of any tax reform bill that would address these particular concerns.

"What the survey reveals is that although the small business and the mid-to-large-size business communities differ with respect to their number one tax reforms goals, there is broad based agreement across the entire business community on the importance of a wide range of tax reform proposals," David Kautter, managing director of the Kogod Tax Center, said in a release. "These proposals should serve as a starting point for Congress as it looks at completely overhauling the nation’s tax laws."

Advisers for small businesses and for medium and large businesses revealed almost identical support for these seven proposals:

• Extending 100 percent expensing (reported by 39 percent of small businesses/37 percent of medium to large businesses)
• Lowering of the income tax rate for corporate and flowthrough income (39 percent/36 percent)
• Reducing payroll taxes on employees (35 percent/32 percent)
• Eliminating estate taxes (26 percent/28 percent)
• Issuing definitive rules on independent contractor status (22 percent/23 percent)
• Replacing the income tax with a national sales tax or other consumption tax (22 percent/23 percent)
• Enacting a single, flat income tax rate (18 percent vs. 18 percent)

While businesses of all sizes seemed to agree on the tax proposals, they differed on tax priorities. For small businesses, two tax proposals tied for first place in importance -- repealing the alternative minimum tax and reducing payroll taxes on employers. Those two proposals outranked the importance larger businesses placed on them by 2 to 1. Making the health care tax deduction for self-employed permanent ranked as the second place priority for small businesses.

The top tax priority for medium and large businesses was extending the 100 percent expensing deduction for equipment purchases -- repealing the AMT and restructuring business income tax tied for second.

Comments

[Pets NStuff]

09:08 PM on 02/15/2012

I for one am for Obama. I think that he is trying to make things work, but there are certain people who are fighting him.

[SharonDoc]

04:22 PM on 02/19/2012

Fighting him? If he were to propose this he would be hailed as a hero, however he hasn't and is completely against it! Exactly how a socialist thinks.

[steveinohio]

02:00 PM on 02/15/2012

Not a tax reform, but the #1 easy thing the gov't could do for our business and many we know of would be to simply pass a full-year budget. Any aspect of our industry that deals with the government as the buyer seems to be more inconsistent these past couple years as agencies are doing the calendar dance much more often where they try to make sure their spending falls in the right month or doesn't run out before the CR that gave them funds runs out. Allowing for a full year of planning instead of monthly or quarterly spurts of activity would make life much easier.

Also, a revenue neutral proposal that cut payroll tax rates permanently but shifted the cap upward would make hiring cheaper for non-capped salaries without hurting the funding of those programs. Put me down for that one.

[whereistheend]

09:59 PM on 02/16/2012

I agree with your idea of lowering the payroll tax rate and increasing the the cap to offset the cost; however, to really give the economy a boost more drastic changes need to be offered. When President Obama was speaking of "shovel ready" projects - I offered a solution which cost nothing unless jobs were created. If the Govt. would consider a tax credit of 50% for new jobs created, there are a lot of companies wanting to expand that would jump on this opportunity. Safeguards would be put in place to require the recapture of the credit if the new job lasted less than three years. There should be a limit of applying the credit to the first $50,000 of each individual salary for a period of three years - to prevent higher income abuse. It would seem the cost of the program would add up rather quickly - but remember - no new jobs - no cost!!

[steveinohio]

06:03 PM on 02/17/2012

I tend to think that a credit for new jobs would have the same problem as the homebuyer tax credit: you'll just end up spending most of the money on people who were already going to do what you were subsidizing.