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Issue: The tax burden today is at record levels. With the federal budget now running a surplus, it’s time for Washington to consider a tax cut to keep economic growth going strong. Broad-based tax rate cuts are the best insurance policy for continued growth, but the current political climate has put an across-the-board rate cut out of reach.

Status/NAM Action: The President 9/23/99 vetoed H.R. 2488, which would reduce taxes $792 billion over 10 years. Among other items, it included these NAM priorities:

• A Five-Year Extension of the R&D Tax Credit: This is an important first step in making the credit permanent. All other recent extensions have been of much shorter duration. This five-year extension will diminish the uncertainty and the compliance and planning problems of a shorter extension and enhance the incentive value of the credit to make it more valuable to businesses. The technology revolution, fueled by R & D activities, has helped spur the growth of budget surpluses. (This provision was enacted as part of separate legislation.)
• Estate Tax Relief: The phased-in repeal of the death tax is welcome news for NAM’s small and mid-sized members. It will reduce the time, money and energy spent by business owners on estate planning, and save many companies that today must be sold for purely tax reasons upon the death of their founders.
• Corporate AMT: The relief from the onerous corporate alternative minimum tax is essential for ensuring sustained economic growth in the United States. We will continue to push for total repeal of the AMT.
• International Tax Relief: The package of international tax provisions will provide an effective economic stimulus by reducing compliance burdens and helping to level the playing field between U.S.-based multinational companies and their foreign competitors.
• Pension Reforms: The package of reforms will expand pension coverage by increasing contribution and benefit limits, increasing portability and modifying the top-heavy rules, eliminating user fees and reducing federal pension premiums on small firms.
• Education Incentives: The extension through 2003 of the exclusion for employer-provided education assistance under Sec. 127 will ease the compliance burden for employers and enhance the value of the benefit for employees.
• S Corp Rate Relief: Companies organized as S corporations also will benefit from the tax rate cut that reduces the top rate on S-corp income by one percent. With this change, S-corps will recoup some of the ground they lost in 1993 when the top tax rate on S-corp income jumped to 39.6 percent.

The NAM in 1999 led a national petition drive for a major tax cut and testified for specific tax cuts several times before the House Ways and Means Committee. In the wake of the veto, the NAM has urged Congress to regroup behind a second major tax cut that includes many of these same provisions. The House responded by passing H.R. 3081 (Lazio—R-NY) on 3/9/2000. The bill pairs a $1 increase in the minimum wage with about $46 billion in tax cuts targeted at smaller businesses.