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Taxpayer Refund and Relief Act
The
Issue
Should the Federal Government give a substantial
portion of the projected budget surplus back to the American people,
of which many own and operate small businesses, in the form of tax
cuts?
Why Important
One of the greatest
impediments to small business today is the tax system. It not only
overburdens small business, but penalizes honest, hard working
Americans. Small business employers cannot continue to create the
vast majority of new jobs in America unless they get meaningful tax
relief.
On August 5, 1999, both the House and Senate passed
the Taxpayer Refund and Relief Act, the largest package of tax cuts
in nearly two decades. Key small business elements of the bill
are:
- Death Tax Repeal
The bill would eliminate estate,
gift and generation-skipping taxes, phasing in cuts through
2009.
- Capital gains tax relief
Individual capital gains
tax rates would be reduced from 20 percent to 18 percent, and from
10 percent to 8 percent (for taxpayers in the 15 percent
bracket).
- Increased health insurance deduction for the
self-employed
As of 2000, self-employed individuals would
be on a level playing field with big business as they would be
able to deduct 100 percent of their health insurance
costs.
- Repeal of the Federal Unemployment (FUTA)
Payroll
Surtax
In 1976 Congress temporarily enacted a 0.2 percent
surtax to repay government loans from federal unemployment trust
funds. While the loans were paid in full by 1987, Congress has
extended the FUTA surtax year after year. The Taxpayer Refund and
Relief Act would repeal the FUTA surtax in 2004.
- Increased small business expensing
Current law
allows taxpayers to expense up to $19,000 with a scheduled
increase to $23,000 in 2003. The bill would allow expensing of
business property and equipment up to $30,000 beginning in
2000.
- Increase in the business meal deduction
The tax bill
gradually increases the meal and entertainment deduction from its
current level of 50 percent up to 60 percent by 2007.
- Tax Extenders
The bill would extend the
Welfare-to-Work and Work Opportunity Tax Credits.
- Marriage Penalty Relief
The bill would gradually
make the standard income tax deduction for married filers $8,600,
or double that of an individual taxpayer, phased in beginning in
2001. NRCA Position
NRCA supports the
Taxpayer Refund and Relief Act. A fair and level playing field for
small firms would help entrepreneurs, such as roofing contractors,
grow their companies and help our economy.
The Other
Side
The President has announced his intention to veto
the bill, asserting that it is reckless and that such tax cuts would
come at the expense of Social Security and Medicare
reform.
(August 1999)
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