National Federation of Independent Business-Wisconsin: Small business applauds deal on federal taxes

Contact: Bill G. Smith, 608-255-6083 or Jack Mozloom, 609-989-8777

Arrangement creates intermediate stability for small businesses, consumers, investors and taxpayers

Madison (December 7, 2010) — The National Federation of Independent Business, the nation’s leading advocate for small businesses, today praised a tentative compromise on income taxes announced last night by President Barack Obama and congressional Republicans.

“We would have preferred a more permanent solution, but this is very good news nevertheless,” said NFIB state Director Bill G. Smith.

President Obama and Republicans have been locked in a standoff for months over whether to let the Bush tax cuts expire for the top bracket. Obama pledged to do so as a candidate for President and until yesterday seemed committed despite warnings from small businesses and economists that higher taxes would snuff out the fragile recovery.

“Raising the top marginal tax rate would have hit small businesses the hardest just when the country needs them to invest, expand and hire new workers,” said Smith. “This deal gives small businesses at least two years of tax stability, which makes investment and job growth more likely in the intermediate term.”

Under the deal, all of the current income tax rates will be extended for two years in exchange for an extension in unemployment benefits. It would reduce the 6.2 percent Social Security payroll tax on all workers by two percentage points for one year, leave in place the 15-percent tax rate on capital gains and cap the estate tax at 35 percent – all top tax priorities of the Wisconsin small business community. Excluded from the arrangement, however, is repeal of the provision of the health care reform law requiring businesses to file IRS 1099 forms for all purchases over $600.

“That provision has been especially burdensome to small businesses and we’re disappointed that repealing it wasn’t part of the deal,” said Smith. “It was never anything more than a money grab for Washington that swamps small businesses in costly and unnecessary paperwork.”

According to Smith it’s an imperfect deal, but considering the political landscape in Washington it is still a major victory for small businesses.

“Our members were most concerned about the predictability of the tax environment,” said Smith. “Small businesses can’t invest in the future if they don’t know what their short-term tax liabilities are going to be. From that perspective, this is a satisfactory outcome.”