Talent leads charge on tax proposal

by Bryan Smith

SBJ Contributing Writer

WASHINGTON Contractors, manufacturers and restaurant owners gathered with U.S. representatives May 27 to throw their support behind a new bill giving them relief in areas ranging from health insurance to business expenses.

Rep. Jim Talent, from Missouri's 2nd Congressional District in suburban St. Louis, introduced the bill.

The proposal seeks to provide small-business owners a tax break and what could be critical assistance in the area of health care for small businesses. Two other representatives cosponsored the legislation.

"The Small Employer Tax Relief Act provides a simple, fair solution to one of small businesses' greatest impediments a tax system that not only overburdens small business, but demoralizes honest, hard-working Americans," said Talent, who chairs the House Committee on Small Business.

"Small employers create more than 99 percent of the jobs in America," said Louisiana Republican Rep. Jim McCrery, a bill cosponsor.

"What's good for small business is good for America. That is why this bill is so important."

Representatives from the National Restaurant Association, the U.S. Chamber of Commerce and two small-business think tanks were also present at the hearing to support the measure.

The legislation has several goals, including an effort to allow the self-employed to deduct 100 percent of their health insurance immediately.

The deduction now is 60 percent. Earlier legislation phases in full deductibility of health costs to the self-employed, but not until 2003.

Talent's provision would erase the four-year wait for full deductibility, giving small businesses 100 percent of their deductions immediately.

Talent said he hopes the faster conversion helps self-employed taxpayers get to the same level as corporations.

"This is just trying to get us closer to sound tax policy," Talent said.

Another proposal in the bill would increase the meal-expense deduction for small business gradually to 80 percent.

Currently, small businesses may deduct 50 percent of their meal and entertainment expenses. The gradual increase would give small-business owners the maximum higher deduction by 2008.

"What we're proposing is not to bring back the three-martini lunch," McCrery said. "We are proposing to bring back the $11.60 lunch." That figure is the average cost of a business lunch, according to McCrery.

Lee Culpepper, vice president of federal relations for the National Restaurant Association, said this part of the bill would help the great majority of restaurants that are small businesses.

"We are especially pleased that this tax package includes the business-meal tax deduction," Culpepper said. "A small businessperson's greatest asset is fostering one-on-one relationships, and they do so in our eating establishments."

The bill also includes other tax cuts for small businesses, including increasing capital outlay expensing that would allow small businesses to deduct such expenditures up to $35,000 a year.

Also included is a proposal to reduce payroll taxes by eliminating a 0.2 percent surtax added in 1976.

Brian Reardon, manager of legislative affairs for the National Federation of Independent Business, said the reduction in payroll taxes is crucial to small businesses.

"Most of the taxes (small businesses) pay are payroll taxes," Reardon said. "Very little attention is paid to payroll taxes."

Talent said the new bill would bring smaller businesses to the same level as their larger counterparts.

"Each of these changes will simplify the tax code while leveling the playing field for small business," Talent said. "This is common sense, and the support from the small-business community makes clear to Congress that the Small Employer Tax Relief Act should be taken seriously."

Marty Regalia, chief economist of the U.S. Chamber of Commerce, said all of the provisions in the legislation would benefit small businesses.

"The much-needed changes to our tax code will not only encourage small businesses to invest, grow and create jobs, but they will also remove some of the inequities in the tax code between small and large businesses," Regalia said.

"This is a very important bill for small businesses," said Karen Kerrigan, president of the Small Business Survival Committee. [[In-content Ad]]