BETHESDA, Md. – In a letter to House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, the Automotive Aftermarket Industry Association (AAIA) commended Congress for passing the Small Business Jobs and Credit Act of 2010, while urging Congress to take action on three other issues of importance to small businesses before adjourning.
The House approved the Senate-passed bill on Sept. 23, and it is expected to be signed by President Obama later this month.
“If Congress is really serious about helping America’s small businesses spur economic growth and job creation, it must take action to provide certainty to the tax system and reduce the burden brought on by high taxes and unnecessary government paperwork,” said Kathleen Schmatz, AAIA president and CEO, in the letter.
“AAIA’s members are working hard to recover from the recession that economically harmed their businesses. Raising taxes and increasing their paperwork burdens at this time will create uncertainty and reduce the amount of capital that they can invest in their businesses and to create jobs. Therefore, it is critical that Congress take action as soon as possible to ensure the future health and vitality of the automotive aftermarket, as well as other small businesses in this country,” said Schmatz.
AAIA strongly urges that Congress take the following three actions before it adjourns to ensure the economic health of the industry both now and in the future:
• Extend Individual Tax Rates: While the taxes set to expire are aimed at individuals, it is important to remember that a large number of aftermarket small businesses are organized as sole proprietors, partnerships or S corporations, meaning that the taxes they pay on their business income are based on individual tax rates. An increase in individual rates will mean that business owners will have less money for investment and job creation.
• Permanently Repeal the Estate Tax: Under current law, AAIA says its small business members face a reduction in the estate tax exemption to $1 million and increase in rate to 55 percent on Jan.1, 2011 unless Congress takes action. An aftermarket business hit with the estate tax often must sell portions of the business because they lack the liquid assets to meet the tax payments. A report by the Joint Economic Committee noted that the typical small business owner has 60 percent of the family net worth invested in the business. Repealing this tax will ensure that these businesses can survive the passing of a family member and can continue to contribute to job growth in their communities.
• Repeal 1099 Reporting Requirements from Patient Protection and Affordable Care Act (PPACA): AAIA believes businesses are already overburdened with tax paperwork and reporting requirements. The new expanded information reporting requirement included in PPACA will further increase the cost and complexity of complying with the tax code. Specifically, beginning in 2012, the new health care law requires businesses to send Form 1099s for every business-to-business transaction of $600 or more for both property and services — creating a tremendous new paperwork compliance burden for small businesses.
