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Taxpayer Refund and Relief Act, August 1999

The issue

Should the Federal Government give a substantial portion of the projected budget surplus back to the American people, of which many own and operate small businesses, in the form of tax cuts?

Why it's important

One of the greatest impediments to small business today is the tax system. It not only overburdens small business, but penalizes honest, hard working Americans. Small business employers cannot continue to create the vast majority of new jobs in America unless they get meaningful tax relief.

On Aug. 5, 1999, both the House and Senate passed the Taxpayer Refund and Relief Act, the largest package of tax cuts in nearly two decades. Key small business elements of the bill are:
  • Death Tax Repeal
    The bill would eliminate estate, gift and generation-skipping taxes, phasing in cuts through 2009.

  • Capital gains tax relief
    Individual capital gains tax rates would be reduced from 20 percent to 18 percent, and from 10 percent to 8 percent (for taxpayers in the 15 percent bracket).

  • Increased health insurance deduction for the self-employed
    As of 2000, self-employed individuals would be on a level playing field with big business as they would be able to deduct 100 percent of their health insurance costs.

  • Repeal of the Federal Unemployment (FUTA)
    Payroll Surtax

    In 1976 Congress temporarily enacted a 0.2 percent surtax to repay government loans from federal unemployment trust funds. While the loans were paid in full by 1987, Congress has extended the FUTA surtax year after year. The Taxpayer Refund and Relief Act would repeal the FUTA surtax in 2004.

  • Increased small business expensing
    Current law allows taxpayers to expense up to $19,000 with a scheduled increase to $23,000 in 2003. The bill would allow expensing of business property and equipment up to $30,000 beginning in 2000.

  • Increase in the business meal deduction
    The tax bill gradually increases the meal and entertainment deduction from its current level of 50 percent up to 60 percent by 2007.

  • Tax Extenders
    The bill would extend the Welfare-to-Work and Work Opportunity Tax Credits.

  • Marriage Penalty Relief
    The bill would gradually make the standard income tax deduction for married filers $8,600, or double that of an individual taxpayer, phased in beginning in 2001.
NRCA's position

NRCA supports the Taxpayer Refund and Relief Act. A fair and level playing field for small firms would help entrepreneurs, such as roofing contractors, grow their companies and help our economy.

The other side

The President has announced his intention to veto the bill, asserting that it is reckless and that such tax cuts would come at the expense of Social Security and Medicare reform.

(August 1999)

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