By the National Small Business Association
WASHINGTON “ Treasury Secretary Timothy Geithner announced Wednesday a broad plan to reform corporate taxes that includes lowering the corporate rate to 28 percent from 35 percent, while eliminating myriad business tax breaks and credits. Unfortunately, the proposal fails to ensure parity between small business and large business, and small businesses soon could be facing tax rates of up to 40 percent or more.
Although the proposal does include some positive language for small business tax credits, NSBA believes firmly that the only way to ensure fairness, transparency and eased complexity of the U.S. tax code is broad reform, stated NSBA President Todd McCracken. And that must also include individual income taxes.
In addition to punting on the tax rates paid by the 83 percent of small businesses taxed at the owner’s personal income tax level, this proposal would make two other potentially harmful changes by eliminating last in first out accounting and adjusting depreciation schedules to scale back capital cost recovery.
On a positive note, the proposal does include provisions that would help small businesses expand by making permanent the research & experimentation tax credit, increasing Section 179 expensing to $1 million, doubling the deduction for start-up costs from $5,000 to $10,000, and allowing cash accounting on businesses with up to $10 million in gross receipts. The proposal also mentions expanding and simplifying the health insurance tax credit, but provides few details.
This plan appears to be driven by the bipartisan consensus that a greatly simplified tax system can unleash greater economic growth, stated NSBA Chair Chris Holman, CEO of MichiganBusinessNetwork.com and president of The Greater Lansing Business Monthly. Unfortunately, without broad tax reform, such as the Fair Tax, this proposal falls short of that.
NSBA advocates on behalf of America entrepreneurs. A staunchly nonpartisan organization, NSBA reaches more than 150,000 small businesses across the country and is proud to be the nation first small business advocacy organization. For more information, please visit www.nsba.biz.