With the passing of Tax Day and a recent hearing before the House Small Business Committee where I serve as vice chairman, my concerns about the obstacles facing our small businesses and their employees are more pronounced that ever.
For years, I have heard from small businesses from across the 3rd District being forced to lay people off, halt expansion plans, or in some extreme cases, forced to close their businesses for good. Additional taxes, higher taxes and the cost of complying with the tax code are stifling our small businesses and by extension the hard-working folks that keep our economy afloat.
The National Small Business Association's 2014 Small Business Taxation Survey found that 53 percent of business owners say the administrative burden related to tax preparation is the biggest challenge while 47 percent say it's paying the bill to the government. And let's not forget that while most individual Americans pay taxes once a year, small businesses deal with multiple tax issues every day they operate which ultimately falls back in the laps of the workers they employ.
Many of these hard-working business owners struggle to decipher the tax code and keep up to date with all the changes made each year.
Small businesses are disproportionately affected by this tax complexity and a study the Small Business Administration's Office of Advocacy found that small firms pay 67 percent more to comply with the tax code than large firms, which ultimately cuts into their bottom line which often means costs related to employees. Then there is the cost of tax compliance for these small firms. According to the Small Business Administration, small businesses spend a whopping 5.5 billion hours fulfilling their income tax obligations, and that's not including state and local taxes. Again, this takes a bite out of resources available to workers.
Meanwhile, the Internal Revenue Service continues to be part of the problem. A survey of small businesses and their tax advisors found that it takes longer to get tax questions answered from the IRS and when they do reach someone at the IRS, many of the employees can't even answer questions!
The challenge now is finding ways to help deal with the tax challenges being faced by our small businesses. I have been working with my colleagues to address these challenges by supporting measures to reduce government spending so we can prevent future tax hikes that will prove harmful to our small businesses and the people they employ. I also have supported efforts to simplify the tax code to encourage investment, expansion and job creation.
We also need to end the so-called death tax which is one reason why family businesses can't survive from one generation to the next. A small business survey found that more than 80 percent of small employers spend an average of $25,000 annually in attorney/consultant fees and life insurance premiums to avoid the Death Tax. Recently, I joined other Members of Congress by signing on to a letter to the House Ways and Means Committee to urge a full repeal of the death tax altogether.
Finally, and perhaps most importantly, I am committed to comprehensive tax reform because we have to do everything we can to allow people to keep more of their hard-earned money. I believe that small business owners and individuals need the certainty of this kind of individual tax reform and with 80 percent of small firms that pay business taxes on their individual return, it is critical we get this done as soon as possible.
As your voice in Washington, I will continue to work on these tough issues based on all I've heard and seen as a member of the Small Business Committee and a former small business owner and employer myself. As the foundation of our economy, we should be doing everything to help these small businesses and their workers and tax reform is perhaps the best way to do that.
U.S. Rep. Blaine Luetkemeyer, R-Mo., represents the state's 3rd District, which includes Jefferson City. His local office can be reached at 573-635-7232.