Press Releases

WASHINGTON, DC – Today the House Small Business Committee’s Subcommittee on Finance and Tax examined the complexity of tax codes on small business owners.

Today the tax code consists of over 67,000 pages, there are over 1,638 different tax forms, and the IRS estimates that it takes over 37 hours to complete the basic 1040 form.  There have been more than 3,250 changes to the tax code, an average of more than one a day including more than 500 changes last year alone.  A recent Tax Foundation survey revealed that a majority of adults believe that taxes are too high, and four in five adults say the code is too complex.
 
“It concerns me that the Administration has proposed several changes in tax policy that will have a negative impact on small businesses,” said Ranking Member Vern Buchanan (R-FL) in his opening remarks.  “Instead of raising taxes, we should be encouraging an environment that generates jobs and investment.”

President Obama’s budget would raise marginal rates on individuals with $200,000 or more in income and $250,000 for couples.  Many small business owners file their taxes as individuals and increasing taxes is bad policy especially given the current economic climate.  The nonpartisan Joint Committee on Taxation projects that at least 3% of filers with small business profits—about 750,000 taxpayers—are likely to face higher taxes in 2011 if President Obama’s proposal becomes law.  If small business owners believe their taxes are likely to go up, they are likely to stop spending, stop hiring and perhaps lay off employees.

Also included in the President’s budget proposals is a freeze on the 45% federal estate tax and the $3.5 million exemption.  The estate tax or “death” tax is of great concern and viewed by many small business owners as a penalty for success.  The death tax discourages investments and redistributes wealth after the death of a business owner.

Finally, President Obama’s cap and trade proposal would cap greenhouse gas emissions from regulated sources, and require businesses to purchase limits or allowances for their emissions.  Many small business owners are concerned that this proposal will cause energy prices to rise, resulting in a $646 billion tax on energy use.

"The burden on small business owners to understand and comply with the IRS tax codes is daunting,” said Ranking Member Graves.  “Simplifying the code is vital to the small business community.  Small business owners are also fearful for President Obama's proposals to increase taxes.  Instead of raising taxes, we should be creating jobs and encouraging economic recovery.”