Tic Tax Toe

You might win tax breaks if a new bill plays out in your favor.
Magazine Contributor
2 min read

This story appears in the March 2003 issue of Entrepreneur. Subscribe »

Lining up the elements of a 2003 stimulus bill will be a game of tic tax toe. Items with bipartisan support, such as a payroll tax "holiday," are likely to get an "x" in their box. But don't expect a permanent elimination of the estate tax in 2011.

With the holiday, employees and business owners won't have to pay the 7.65 percent tax for a limited period of time. Sen. Jon Corzine (D-NJ) has championed the idea, and Sen. Mary Landrieu (D-LA) used it as a signature issue in her victory in a December election. The Business Roundtable, an influential group of corporate chief executives, and some Republicans support the idea as well, making it a strong contender for any stimulus package.

Todd McCracken, president of National Small Business United (NSBU), supports a holiday because the payroll tax hits small businesses harder than large businesses. Small-business owners pay 7.85 percent on their own salary, while corporate CEOs don't. "But we have to be careful that a holiday for the business owner's share doesn't get lost in the political horse-trading over the package and its total cost," McCracken warns.

It will be more difficult, however, for Republicans to get Democratic support for the permanent elimination of the estate tax in 2011. Congress phased the estate tax out over 10 years in the 2001 tax bill with it ending in 2010, but it returns in 2011. Former Clinton administration Treasury Secretary Robert Rubin has advocated keeping the estate tax (which applies to estates over $1 million) for estates worth over $7 million. But NSBU and other small-business groups still want to see the estate tax permanently disappear.

Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.

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