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Representative Steve Chabot
Ranking Member

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Small Business Issues

Small businesses are the backbone of this economy. We must promote policies that encourage economic growth and foster an environment where entrepreneurs and their employees can prosper.” - Ranking Member Steve Chabot

Affordable Health Care: One of the biggest concerns facing small businesses and their employees is the lack of access to affordable healthcare. The U.S. Chamber of Commerce says that more than 45 million Americans are uninsured with nearly 60 percent of those employed by small businesses.

Congress can help lower the cost of health insurance coverage by passing legislation to allow small businesses to band together in associations and negotiate lower rates with insurance companies.  By purchasing health insurance at a lower cost, association health plans make it more affordable for small businesses to offer insurance coverage to their employees.

Eliminating the Death Tax: The “inheritance tax” or “death tax,” as it is often accurately labeled, is one of the primary reasons why family-owned small businesses and farms do not survive from one generation to the next. The tax relief passed by Congress in 2001 gradually phases out the death tax by 2010.  However, unless Congress acts to extend this important tax relief, the death tax will return in full force in 2011.

A small business survey indicated that more than 80 percent of small employers spend an average of $25,000 annually in attorney/consultant fees and life insurance premiums to avoid the crushing blow of the death tax that forces many small companies out of business and keeps others from investing that money in growth opportunities.

Tax Reform: The U.S. tax code has become an increasingly complex maze of laws and regulations that can be particularly burdensome for small businesses. For newly established businesses, navigating the complex rules and reporting requirements is particularly difficult.

In 2001, the Small Business Administration's (SBA) Office of Advocacy released a report on the regulatory and compliance costs faced by small firms. The report showed that small businesses with fewer than 20 employees spend over $1200 per employee to comply with tax paperwork, recordkeeping, and reporting requirements. This is more than double the compliance cost faced by larger firms. Simplifying the tax code would relieve a massive regulatory burden on small businesses.

Government Contracting: The SBA is charged with helping our nation's small businesses work through the complex procurement process. The SBA must focus its procurement outreach efforts to ensure that small businesses understand this process. The practice of consolidating contracts, or "contract bundling," limits the ability of small businesses to compete and ultimately hurts the American taxpayer by reducing competition for federal dollars.

Most government agencies are not achieving their goals for contracting with small businesses particularly as prime contractors. When small businesses obtain prime federal contracts they are exposed to federal agency procurement decision-makers, the gatekeepers to federal contracts.  The House has passed legislation to reform this process to ensure that small businesses have a greater opportunity to compete for government contracts.

Liability Reform: Unfounded and unfair lawsuits are increasingly threatening the ability of retailers and sellers to run their businesses and contribute to their communities. According to a 2007 study by the U.S. Chamber Institute for Legal Reform, small businesses bear 69 percent of business tort liability costs, while taking in only 19 percent of business revenues. With tort costs approaching $100 billion annually – with nearly $20 billion of those costs paid out of pocket – small firms are threatened with closing their doors.1

The Small Business Liability Reform Act, introduced by Ranking Member Steve Chabot, is designed to reduce the harm caused by frivolous lawsuits.  In addition to protecting small business owners from unnecessary legal expenses and helping consumers who face higher prices as a result of soaring litigation costs, the legislation would strengthen the justice system by ensuring only those cases with legal merit are able to move forward.

1 The U.S. Chamber Institute for Legal Reform 2007 study is based on 2005 data.