The unsustainable policies of government bailouts, skyrocketing federal spending, higher taxes and record national debt have had a devastating effect on small businesses.  In order to hire new workers, expand operations, and help our economy, entrepreneurs and small business owners need certainty.  However, the only thing that is certain for small business owners these days is more taxes and regulations.

The U.S. tax code has become an increasingly complex maze of laws and regulations.  For newly established businesses, navigating the confusing rules and reporting requirements is extremely tough; few small companies have the resources to employ tax attorneys and accountants for help with taxes.  Studies have found that small firms with fewer than 20 employees pay more than $1200 per employee to comply with tax paperwork and recordkeeping. 

Lowering the tax burden on small firms and simplifying the tax code would encourage small business investment, expansion and job creation.  Not only should Congress extend the 2001 and 2003 tax cuts, we must also work to prevent new taxes or tax rate hikes from being levied upon small businesses.   

Eliminating the Death Tax:

The Death Tax (also known as the Estate Tax) is a tax applied to the transfer of a person’s assets at death.  In 2001, Congress enacted important tax relief measures that put an end to the Death Tax on January 1, 2010.  However, unless Congress acts to extend this important tax provision, the Death Tax will return full force in January of 2011.

According to a study by the Joint Economic Committee, the Death Tax is the number one reason family businesses do not survive from one generation to the next.  Small businesses are often family-operated and transferred from one generation to the next.  In some instances, although the assets transferred after a decedent’s death may be valuable, the heir’s net worth or liquidity may not be high.  The heir, facing a 50% Death Tax bill, may be forced to sell vital equipment or land to pay the tax, rendering the business inoperable. 

A small business survey found 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 Death Tax.  It forces many small companies out of business and keeps others from investing that money in growth opportunities.  It is critical that Congress take steps to kill the Death Tax, once and for all, and prevent it from returning in 2011.