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Tax equity is the current rallying cry of small-businessinterest groups. They want small firms to enjoy the same taxtreatment and incentives that larger businesses receive. NationalSmall Business United (NSBU) recently released a report identifyingprovisions of the tax code that discriminate against smallbusinesses. For example, when Congress tried to help smallbusinesses start pension plans, they created SIMPLE plans."Yet big business 401(k) plans allow annual employeecontributions 57 percent greater than SIMPLE plans," the studyfound. It's time to close the gap, NSBU asserts.
Here are some other examples of how lawmakers can level theplaying field:
- Boost Section 179 expensing limits for new equipmentpurchases. Currently, small businesses with up to $200,000 incapital investments in the tax year can expense the first $24,000for tax purposes. A bill introduced by House Small BusinessCommittee Chairman Don Manzullo (R-IL) would increase the limits sobusinesses with up to $325,000 in investments could immediatelyexpense up to $40,000.
- Expand the use of Medical Savings Accounts, which allowemployers to contribute money to accounts set up for theiremployees to purchase their own health care.
- Provide the self-employed with an immediate 100 percentdeductibility of health insurance costs. In 2002, 70 percent ofthe cost is deductible. By 2003, 100 percent will bedeductible.
Small-business organizations intend to push hard for theiragenda, saying the time is right to correct what they see as thetax code's inequities.
Great Falls, Virginia, writer Joan Szabo has reported on taxissues for more than 15 years.
