Hearing of the House Small Business Committee - The Biggest Tax Problems for Small Businesses
Hearing
Good afternoon. I call this hearing to order.
Next Tuesday, April 15, Americans will once again file their annual income tax returns. For small business owners, Tax Day is yet another reminder of the many burdens of the tax laws. They bring a never ending parade of higher rates, increased complexity, and ever-changing regulations.
If you talk with small business owners often, as members of the Committee do, you know that individually they may be affected by one particular part of the tax law or another. But taken together, small business owners consistently tell us that they are impacted by higher taxes, new taxes, increasing tax code complexity, uncertainty, and the additional time required to resolve issues with the Internal Revenue Service. All of this means they have little ability to plan with confidence, and less time to grow their companies.
One tax preparer for small businesses recently called this cumulative effect "death by a thousand cuts." We know that small businesses face unique tax challenges, because research have shown that it is more costly and time consuming for small firms to comply with the tax code. But while most Americans may think about taxes once a year, entrepreneurs cope with multiple tax issues each day in operating their businesses.
In connection with today's hearing, the National Small Business Association is releasing its annual Tax Survey of Small Businesses. The survey confirms that entrepreneurs are spending scarce resources on federal tax compliance. About half (49%) are spending $5,000 or more per year on tax compliance -- not including tax owed. Forty percent spend more than 80 hours per week dealing with federal taxes, and 86% pay an external tax preparer to handle their taxes. The overwhelming majority (73%) said federal taxes have a significant to moderate impact on the day-to-day operation of their business. We will hear more about the survey results shortly from Tim Reynolds, one of NSBA's members.
Today, we hope to learn more about these tax issues. I want to thank all of our witnesses for being here. We look forward to your testimony.
Now I yield to our Ranking Member for her opening statement.
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