The Monthly Update on Small-Business Policy
Tuesday, March 11, 2014
Posted by: NSBA President and CEO Todd McCracken
Small Business Policymakers
On Wednesday, March 5, the Senate Small Business Committee voted to approve the nomination of Maria Contreras-Sweet as Administrator for the U.S. Small Business Administration (SBA) Nominated Jan. 15, 2014 by President Barack Obama, Contreras-Sweet’s nomination now heads to the full Senate for a vote, wlthough no clear timeline has been established for that vote. NSBA registered support for Contreras-Sweet and is urging the Senate to move expeditiously in confirming her.
In addition to changes at SBA, the U.S. Senate Small Business Committee has also welcomed new leadership in recent weeks. Sen. Maria Cantwell (D-Wash.) has taken over as Chair for the committee, replacing Sen. Mary Landrieu (D-La.), who became Chair of the U.S. Senate Energy and Natural Resources Committee. Sen. Cantwell’s first act as chair was overseeing the committee markup to approve the nomination of Contreras-Sweet as the next SBA Administrator. Sen. Cantwell has been a champion for many small business issues, specifically calling for improved small-business access to capital.
Tax reform has long been a top priority for NSBA, where data has shown that recently, complexity is outpacing financial cost as the number one burden posed to small businesses by the U.S. tax code. On Feb. 26, House Ways and Means Committee Chairman Dave Camp (R-Mich.) released broad tax reform language—the culmination of several years of intense work by various Members of Congress, staff and stakeholders—which would lower corporate and individual tax rates, reform U.S. international tax rules and aims to simplify the tax code.
Among the key provisions in Chairman Camp’s proposal that would impact small-business owners:
- The current 35 percent top corporate rate would be reduced over five years to 25 percent;
- The current seven individual income tax brackets—ranging from 10 percent to 39.6 percent—would be replaced by just two tax brackets of 10 percent and 25 percent;
- A 10 percent surtax would be assessed on certain types of income above $450,000 for joint filers and above $400,000 for single filers, including certain items currently excluded from taxable income, such as employer provided health benefits and the self-employment health deduction, the section 911 income exclusion, tax exempt interest, untaxed Social Security benefits and 401(k) contributions.
- The standard deduction would be phased out for all filers with MAGI income exceeding certain thresholds;
- The corporate and individual alternative minimum tax (AMT) would be repealed
- The research and experimentation (R&E) credit would be modified and made permanent;
- Beginning in 2014, the draft would make permanent an expensing limit of $250,000 and an investment phase-out of $800,000
The draft legislation which can be viewed here along with a detailed section by-section and JCT materials. More information can also be found at tax.house.gov.
NSBA Economic Report
Recently, NSBA released its 2013 Year-End Economic Report which shows continued gains in economic outlook and confidence among America’s small-business owners. In fact, when asked to compare today’s economy with five years ago, nearly half, 48 percent, said it is better off, the highest economic outlook in six years.
While overall, the report is positive and shows improvement over the past six years, the fact that the majority still believe there will be a flat or recessionary economy in the coming 12 months is driving the continued stagnation we’ve seen in small-business hiring.
There was very modest growth in small-businesses revenue, profits and hiring over the last 12 months with greater increases in projections for the coming 12 months. Nearly half of small firms said they increased employee compensation in the last year and the same number said they plan to do so in the coming year.
Economic uncertainty continues to be the most significant challenge facing small-business owners today, making lawmakers’ ability to work together on the key issues facing our nation all the more critical.
Please click here to download the full report.
Earlier this month, NSBA (and more than 150 businesses and other organizations) signed onto a letter urging the Senate to exercise extreme caution in moving forward with patent legislation that could weaken protections for individual patent holders or inadvertently devalue patent rights. NSBA has repeatedly urged Congress to hold targeted hearings on the relevant issues facing small, innovative firms and entrepreneurs when it comes to the U.S. patenting process, and carefully consider the unintended consequences that several proposed bills could have.
Please click here to view the letter.
Affordable Care Act Delays
In the last month, there have been two key delays announced by the administration in regards to Obamacare. First, on Feb. 10, the Administration announced they would further delay the implementation of the employer mandate for firms with 50-99 employees until 2016. Previously the mandate had been bumped to 2015 for all firms and this latest delay is only for smaller firms.
This delay did, however, relax the mandate for companies with more than 100 employees. While the law calls for larger companies to provide “affordable” coverage to 95 percent of its workers (those who work over 30 hours per week), the Administration now says no penalties will be imposed so long as at least 70 percent of workers are eligible for such coverage.
The latest delay was announced March 5, 2014 and will allow insurance companies to continue offering health plans that don’t meet the Affordable Care Act’s requirements. Initially, these plans were slotted to be eliminated by 2014, however the latest delay means non-compliant plans could be offered as late as 2017.
These delays underscore the complexity and unworkability of the employer mandate, one of the reasons for NSBA’s original opposition to PPACA. In fact, according to the recently-released 2014 NSBA Small Business Health Care Survey, small businesses report spending on average 13 hours and $1,274 per month on the administrative side alone of understanding the Affordable Care Act.
Please click here for more specific details on the Affordable Care Act, and to download NSBA’s comprehensive compliance guide.