The Salem Statesman Journal - Tax Code Changes Can Ease Burden On Small Business
Small businesses are the backbone of Oregon's economy as they provide jobs for 57 percent of employed Oregonians. They are also the first to suffer when the economy turns sour.
That's why the recently passed federal recovery package included several programs to increase the funding available for small businesses. The package allows the Small Business Administration to guarantee up to 90 percent of loans to small businesses. It also eliminates fees for SBA-backed loans and extends small business expensing provisions for 2009, allowing write-offs up to $250,000.
While these programs represent some progress, as a small business owner for more than 30 years, I also understand that one of the biggest challenges facing entrepreneurship is our current tax code.
Any small business owner will tell you the same thing: The tax code has become a barrier to starting or maintaining a small business. Whether we are talking about dollars spent or time lost, tax complexity is an enormous drain on small firms. This should come as no surprise. With 3.7 million words and over 70,000 pages, the tax code is a nightmare to navigate.
Unlike big companies, small businesses do not have an army of tax attorneys and accountants to navigate the complexities of the tax code. Every dollar spent on navigating our complicated tax code represents tangible jobs small businesses cannot create, pieces of equipment they cannot buy and capital that does not make it into the economy.
In an average year, individuals and companies spend close to $265 billion on their taxes. Small businesses pay the lion's share of that sum. In fact, entrepreneurs spend an estimated $1,304 per employee, roughly twice the amount that big companies pay.
On May 7, I held my first hearing as chairman of the Small Business Subcommittee on Finance and Tax. We heard from several business owners, including two Oregonians who explained at length how burdensome the tax code has become.
Tax regulations should not be such a stumbling block. Just as important, we need to be sure small business owners are aware of every incentive available to them. A good example of this is the home office deduction.
Fifty-two percent of small businesses operate out of the home, yet only a handful claim the deduction. In fact, the IRS admits that many eligible taxpayers are not claiming their home office expenses on their tax returns. During our hearing, a witness explained that many small business owners do not claim the deduction because it is so complicated and they fear being audited if they file it incorrectly.
That's why I have partnered with Republican Rep. John McHugh to introduce the Home Office Deduction Simplification Act. This would allow eligible individuals to take a standard deduction of $1,500 instead of itemizing on their return.
With proposals like a standard home office deduction and others modifying the tax code, we can ease the burden and allow small businesses to thrive, which will go a long way to helping rebuild our economy.