news

STATEMENT

of the

Honorable Nydia Velazquez, Ranking Member

House Committee on Small Business

The Biggest Tax Problems for Small Businesses

Wednesday, April 9, 2014

With April 15^th just around the corner, most Americans are wrapping up their paperwork.  Yet, for many small business owners, the process never really ends. Constant changes to the tax code make compliance a year-round challenge for small employers. This is not the first time our committee has discussed tax challenges facing small firms.  The Small Business Committee has held numerous hearings examining how specific provisions like bonus depreciation and the estate tax affect entrepreneurs.

Yet, the most frequent complaint we hear from small employers is how our current tax system creates uncertainty, hindering long-term business planning and growth. This uncertainty is a product of a complex and outdated tax code. As we all know, complexity adds significantly to the cost of tax compliance for small firms.  Modernizing this system will provide simplicity, fairness, and predictability to businesses of all sizes.

That’s why I’m glad the Senate has taken measures to retroactively extend almost all 55 extenders that expired last year. Now, we must give small firms some certainty that they will operate under these rules for the foreseeable future. More broadly, tax law operates best when small businesses have long-term certainty and stability.  This is why fundamental tax reform is imperative.

One tax reform goal should be promoting growth and job creation.  Small businesses are a vital part of that equation.   Too often, entrepreneurs’ tax reform priorities are drowned out in the larger debate.   I expect today’s discussion will yield recommendations that will be helpful as we work together to improve the tax environment for small firms. Although some existing tax policies provide critical relief to small firms, much of the code is riddled with inequities and unnecessary complexities.  For small entities, this creates obstacles to success, rather than encouraging economic growth.  

It is important we continue working toward a comprehensive overhaul of the tax code, rather than a corporate-only approach.   Doing so supports our nation’s job creators by allowing them to continue hiring and expanding without worrying about annual changes. Most importantly, any agreed upon plan must ensure the extension of critical business expenditures. One critical provision is enhanced business expensing – sometimes called “Section 179.”  The majority of small firms we’ve spoken to insist that this specific item be retained. It encourages small entities to make purchases now while also putting more money in their pockets to invest and hire.

One thing is clear about tax reform -- small firms’ needs must come first.  No matter the approach taken, the small business community wants their voice to be heard. We cannot move forward without their input and we must recognize the impact of how any proposals would affect them. I believe there exists an opportunity to implement long-lasting reforms.  Doing so will have immediate benefits for small businesses. With that, I thank the witnesses for their participation.  Your perspectives will add valuable insight to this discussion.     

I yield back. 

###