This story appears in the
September 2002 issue of
Entrepreneur.
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Tax equity is the current rallying cry of small-business
interest groups. They want small firms to enjoy the same tax
treatment and incentives that larger businesses receive. National
Small Business United (NSBU) recently released a report identifying
provisions of the tax code that discriminate against small
businesses. For example, when Congress tried to help small
businesses start pension plans, they created SIMPLE plans.
"Yet big business 401(k) plans allow annual employee
contributions 57 percent greater than SIMPLE plans," the study
found. It's time to close the gap, NSBU asserts.
Here are some other examples of how lawmakers can level the
playing field:
- Boost Section 179 expensing limits for new equipment
purchases. Currently, small businesses with up to $200,000 in
capital investments in the tax year can expense the first $24,000
for tax purposes. A bill introduced by House Small Business
Committee Chairman Don Manzullo (R-IL) would increase the limits so
businesses with up to $325,000 in investments could immediately
expense up to $40,000.
- Expand the use of Medical Savings Accounts, which allow
employers to contribute money to accounts set up for their
employees to purchase their own health care.
- Provide the self-employed with an immediate 100 percent
deductibility of health insurance costs. In 2002, 70 percent of
the cost is deductible. By 2003, 100 percent will be
deductible.
Small-business organizations intend to push hard for their
agenda, saying the time is right to correct what they see as the
tax code's inequities.
Great Falls, Virginia, writer Joan Szabo has reported on tax
issues for more than 15 years.
