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Camp releases small business tax discussion draft

March 14, 2013

Article courtesy of National Small Business Association (NSBA)

House Ways and Means Chairman Dave Camp (R-Mich.) released a discussion draft on Tuesday, March 12 outlining tax reform specific to small business. While NSBA is continuing to study the draft, the efforts of Mr. Camp in highlighting and developing a small-business-specific proposal, particularly given the disproportionate tax burden small businesses bear, are much appreciated.

The discussion draft is the latest in a series of drafts put forth by the Ways and Means Committee as a result of hearings, stakeholder meetings and working group discussions over the past year. Among a host of proposals, the draft includes:

  • Permanence for Section 179 expensing at threshold of $250,000, which is set to drop to just $25,000 in 2014;
  • Simplification and an increase in the threshold for small-businesses utilizing cash accounting from $5 million to $10 million for all businesses;
  • An increase and expansion in the deductibility of start-up expenses from $5,000 up to $10,000 and include operational costs;
  • A reordering and simplification of the due dates of tax returns for partners and S corporations; and
  • Two separate options designed to achieve greater uniformity between S corporations and partnerships.

While NSBA continues to push for a broad reform, and has been a leading proponent of the Fair Tax, Chairman Camp’s draft raises important issues on small-business taxation and is a step in the right direction. Moving forward, NSBA encourages any formal proposals to embrace the key tenets of NSBA’s Tax Reform Checklist: promote fairness, transparency and eases complexity.

Tax reform is NSBA’s number one priority, driven by the fact that, according to NSBA data, more small businesses cite complexity and administrative burdens (56 percent) as the biggest problem with the tax code than those that cite the financial burden (44 percent). Furthermore, nearly half of small businesses spend more than 80 hours per year–two full work-weeks–on federal taxes alone. This is wildly unfair and economically unsustainable.

The discussion draft reflects what has become a trademark of Camp’s approach to tax reform – an open and transparent process in which stakeholders are encouraged to review and comment on specific legislation prior to formal legislative action. Chairman Camp encourages all interested parties to provide feedback to the Committee staff and to the Small Business/Pass Through Tax Reform Working Group.

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