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Small Business Committee Newsletter Printer Friendly Version
Small Business Committee Notes
Friday, February 03, 2006 Printer Friendly Version
Small Business Committee Notes February 3, 2006 -- Issue 109-33 Phil Eskeland, Policy Director, House Committee on Small Business _______________________________ Chairman Manzullo Sets Committee Agenda for 2006 On Thursday, January 26, U.S. House Small Business Committee Chairman Don Manzullo announced the Small Business Committee’s agenda for 2006. Chairman Manzullo said the House Small Business Committee will work with House Leadership and the Bush Administration to help pass a permanent extension of the President’s 2001 tax cuts, with a focus on permanently repealing the job-killing estate or “death” tax. Chairman Manzullo will also seek a permanent extension of the higher small business expensing limit of $100,000. Chairman Manzullo will also work to convince the Senate to pass legislation allowing national Association Health Plans (AHPs), which allow small employers to purchase health insurance at more affordable group rates through national associations, and reforming our nation’s out-of-control medical liability system, which has contributed to annual double-digit increases in health care costs for small business owners. The House has passed both bills on numerous occasions the past several years. In addition, Chairman Manzullo will work to create a small business office under the U.S. Export-Import Bank during its reauthorization process this year. “We must reduce the surging cost of health care and prevent further tax increases if we are to give our small employers a chance to compete in this global marketplace,” Chairman Manzullo said. “By passing this legislation, we will give our small business owners the tools they need to expand and create more jobs for Americans.” Under the committee’s legislative jurisdiction, Chairman Manzullo will lead the effort to reauthorize the small business programs at the Small Business Administration; seek passage of the four Small Business Development Center bills (HR 230, HR 527, HR 2981 and HR 3207); work with the Judiciary Committee to pass the Regulatory Flexibility Improvements Act (HR 682) and the Equal Access to Justice Reform Act (HR 435); seek passage of the Participating Debenture portion (HR 3429) of the Small Business Investment Company (SBIC) program to replace the Participating Securities program; and find a compromise solution to the problem facing small biotech companies, owned and controlled by large venture capital firms, who still wish to participate in the Small Business Innovation Research (SBIR) program at the National Institutes of Health (NIH). The Small Business Committee will also continue to monitor the Administration’s effort to repeal or amend unnecessary regulations that burden American manufacturers; closely oversee any new proposed regulations at the Department of Housing and Urban Development (HUD) to amend the Real Estate Settlement Procedure Act (RESPA) process; monitor the development of new enhanced land border crossing documents by the Departments of State and Homeland Security; continue to track the health of our nation’s Defense Industrial Base, particularly government policies that harm second- and third-level suppliers; continue to ensure small businesses get a fair opportunity to win federal government contracts by monitoring achievement of various small business goals and finding creative ways to open up more opportunities for small business in larger federal contracts; and ensure free and fair trade for small businesses in the global marketplace, including protection of intellectual property rights. For further information, please contact Phil Eskeland, Policy Director. _______________________________ Chairman Manzullo: President’s Plan Will Help Small Employers Grow Our Economy, Create Jobs On Tuesday, January 31, U.S. House Small Business Committee Chairman Don Manzullo (R-IL) issued the following statement in response to the President’s State of the Union Address: STATEMENT “President Bush tonight offered a sound economic plan that will give our small employers the tools they need to thrive and create high-paying jobs for Americans. As Chairman of the House Small Business Committee, I will work closely with the President to enact his sound economic agenda that offers opportunity to those seeking the American dream. “I agree with the President that we must make the tax cuts permanent to continue to grow our economy and protect Americans from huge job-killing tax increases. We must continue to seek more affordable health care options for our small employers and enact medical liability reform so they can keep providing health care coverage for their employees. We must also promote worker training and build on our energy plan to encourage more domestic and renewable production that will drive down energy costs for our citizens and our small business owners, the job creators of America.” “We must also continue to challenge our trading partners who flout international trade laws to give their companies an unfair advantage over Americans. I will work with the President this year to level the global playing field for our manufacturers, who can beat anyone in the world if given an equal chance.” For further information, please contact Phil Eskeland, Policy Director. _______________________________ Transforming the Tax Code: An Examination of the President’s Tax Reform Panel Recommendations On Wednesday, February 1, the Tax, Finance & Exports Subcommittee, chaired by Representative Jeb Bradley (R-NH), and the Rural Enterprises, Agriculture & Technology Subcommittee, chaired by Representative Sam Graves (R-MO), held a joint hearing examining the impact of the President’s Tax Reform panel recommendations on small business. Below are excerpts from their opening statements: Chairman Bradley: The current tax code is broken and we are in dire need of a simpler system that is more conducive to our economic goals. For too long, the American people have been burdened by the constraints of an overly complex and unfair tax system that is riddled with loopholes and tax shelters. In a time of ever-increasing globalization, these impediments to economic growth are being felt at the heart and soul of this country, and preclude hardworking Americans from attaining their full economic potential. This is especially true for the small business owner, who cannot compete because he is financially unable to discover the loopholes created by the mammoth number of bureaucratic regulations in place. Attempting to restrict corner-cutting by further legislation only adds to the nightmare scenario. Simplification is the way to a tax system truly favorable to growth and fairness. Trying to resolve these complex issues put in place by the onerous tax structure by chipping away at it provision by provision will get us nowhere. We need real reform now. Small businesses that could be flourishing are failing. These are people who seek to embark upon a new endeavor and it is the government’s responsibility to provide them with a framework that best enables them to succeed. Before serving coming to Washington, I was a small business owner myself. I know firsthand the significant role they play in the success and prosperity of our economy. I understand and have had to deal with the complexities of the current tax code and know the need for real reform. Small businesses are the lifeblood of this economy and we have needlessly impeded their efforts for too long. We must start anew and create a fairer system, which allows endless opportunity, even for the smallest businesses. Chairman Graves: Throughout my tenure as a member of Congress I have traveled my district visiting with small business owners, manufacturers, and others talking about issues that impact their business. It is almost always guaranteed that tax reform is brought up. According to my constituents, the current tax code is complex, time consuming, and cost too much hard earned money to examine. I support simplifying the tax code. The tax code including all the opinions and precedents is over 54,000 pages long or 2.8 million words. To complete the form takes, on average, 11 hours. I think people have more valuable things to do with their time. Government shouldn’t handcuff small business owners - it ought to work with them. I think simplifying the tax code helps everyone. The tax code is a major drag on the economy. According to certain estimates, the tax code costs the economy $1 trillion in lost growth each year. This represents hundreds of thousands of jobs and opportunities never created because of the tax code. Americans deserve a tax code that is simple, fair and promotes economic growth. It is fundamentally unfair to have a tax code that has different rules for different people. Small businesses create 7 out of every 10 jobs in America. I want to make sure that we don’t put a tax burden on them so heavy that there is no incentive to create those jobs. The tax code impacts our lives in ways we rarely acknowledge. For example, the tax code tells us when it’s the best time to get married, buy a home, change jobs, start saving, have children, get an education, and even when it’s the best time to die. According to one small business owner who testified before the President’s Bipartisan Advisory Panel on Tax Reform, the tax code affects almost every decision he makes: where to invest, when to invest, how much to invest in machines and equipment used in productions, and how to finance investment. The complexity of the tax code is what makes it so easy for persons with means and motive to cheat the system. Closing loopholes is not enough. Closing these loopholes only adds additional complexity to the system and all too often provides a new way to cheat. We need to rip this thing-up and start over. NO one in their right mind would create a tax code that costs so much and accomplishes so little. For further information, please contact Adam Noah, Counsel, or Piper Largent, Professional Staff. _______________________________ Issues in Brief Paperwork Relief from the Internal Revenue Service On Tuesday, January 3, 2006 the Internal Revenue Service (IRS) published regulations allowing certain employers to file withholding tax forms (Form 941 - Social Security and Medicare tax (FICA) and income tax withheld by the employer) annually instead of the current quarterly requirement. This applies for those employers with a tax liability of $1,000 or less. The IRS estimates this will reduce the paperwork burden for nearly 950,000 very small business owners. Final Federal Prison Industries rule adopted On Tuesday, January 3, 2006, the Federal Acquisition Regulation (FAR) Council, which oversees changes to federal procurement rules, issued a final rule that permanently prohibits the purchase of products or services from Federal Prison Industries (FPI) unless the acquiring agency determines that FPI offers the best value for the desired good or service, based on market research. This action fulfills a provision inserted in the FY 2005 Consolidated Appropriations Act (Division H, Section 637 of PL 108-447), making permanent the prohibition on FPI mandatory sourcing preference in government contracting. This final rule will allow small business the opportunity to compete for federal government contracts that were previously reserved exclusively for FPI, totaling about $800 million in FY 2004 in over 250 broad classes of products and services. Size standard changes On Thursday, January 5, 2006, the inflationary increases to the Small Business Administration’s (SBA) size standards became effective. Size standards determine small business eligibility for a wide variety of federal government programs, including government procurement. The SBA has adjusted its dollar-based small business size standards, which are based on receipts, net worth, and financial assets, to reflect inflation that has occurred since February 2002, when SBA last adjusted them for the same reason. Since February 2002, prices have generally increase 8.7 percent. SBA increased the familiar “anchor” size standard, primarily for service-based industries, from $6.0 million to $6.5 million. Size standards that are higher than $6 million also reflect similar percentage increases. President’s small business agenda On Thursday, January 19, President George W. Bush spoke before a small business audience at JK Moving & Storage in Sterling, Virginia to discuss the national economy. The President said that small businesses are the “centerpieces” of his economic agenda. He highlighted six key policy areas of interest to small business: tax relief; access to affordable quality health care; lawsuit reform; education and worker training; energy; and international trade. For a complete copy of his remarks and small business agenda, please refer to the web site of the White House (http://www.whitehouse.gov/infocus/smallbusiness/). It is interesting to note that JK Moving & Storage managed a major expansion of its warehouse facility in 1993 through the SBA’s 504 Certified Development Company (CDC) program. Senate passes tax relief On Thursday, February 2, the Senate passed a $70 billion tax cut bill by a vote of 66 to 31. The Senate initially passed a $60 billion tax cut in November (see SBC Notes 109-29) under special rules (“reconciliation”) that protected the bill from a Senate filibuster; thus not requiring 60 votes. The House followed suit by passing its own version (HR 4297) of tax relief in December (see SBC Notes 109-30). However, because the Constitution requires that all revenue-related bills must originate in the House, the Senate had to first debate the House version and then amend it with the Senate language. The Senate’s action yesterday now enables both the House and the Senate to enter into a conference to reconcile the two different versions of the tax reconciliation bill into one common package. The main differences between the two versions is that the House bill extends by two years the cut in tax rates on capital gains and dividends from 2008 to 2010 (the Senate language is silent on this issue) and the Senate language extends Alternative Minimum Tax (AMT) relief (the House dealt with this issue separately as part of HR 4096 - see SBC Notes 109-30). Because the House just sent to the President’s desk about $10 billion more in mandatory spending cuts than what the Senate originally called for, there is now additional room in the tax reconciliation package for further tax relief. Thus, the Senate opted yesterday to extend for two years, instead of one, several non-controversial tax breaks, including some of interest to the small business community, including the research credit, the combined work opportunity tax credit and welfare-to-work credit, and the 15 year cost recovery for qualified leasehold improvements and qualified restaurant improvements. HR 4297 now awaits further action before the tax reconciliation conference committee. _______________________________ Upcoming Events Monday, February 6 - President’s Fiscal Year 2007 budget request will be released. Wednesday, February 8 10:00AM Regulatory Reform & Oversight Subcommittee hearing on “The Internet Sales Tax: Headaches Ahead for Small Business?” For further information, please contact Chris Szymanski, Professional Staff. _________________________________ Past hearings/mark-ups/roundtables/meetings in 2006 February 1, 2006 - Tax, Finance & Exports (TF&E) and Rural Enterprises, Agriculture & Technology (REA&T) joint subcommittee hearing on “Transforming the Tax Code: An Examination of the President’s Tax Reform Panel Recommendations.” _____________________________ Small Business Website Check out the Small Business Committee website at http://www.house.gov/smbiz. The site includes regular updates on small business committee news. The site features special projects, press releases, hearings and scheduling information. _______________________________ Phil Eskeland Deputy Chief of Staff & Policy Director House Committee on Small Business Phil.Eskeland@mail.house.gov (202) 225-5821 To contact any staff member listed in the above newsletter, please use the general number for the House Small Business Committee - (202) 225-5821. Please E-mail me if you want to be removed from the mailing list or if you know of others who might be interested in receiving this publication. Mission Statement of the House Committee on Small Business "We promote the success of America’s small businesses by leveling the global economic playing field and reducing domestic burdens that impede their growth. In this spirit, we work to ensure that every branch of the U.S. government understands the critical role America’s small businesses play - both at home and abroad - including the jobs they create and the spirit of entrepreneurship they embody.”
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