SMALL BUSINESS UPDATE

Small businesses are the heart and soul of America. From start-up high tech firms to the local mom and pop store, the nation’s small businesses fuel economic growth and provide jobs to millions of Americans. The numbers alone are proof. Comprising 99.7% of the nation’s employers, small businesses employ 53 percent of the private sector workforce and account for 50 percent of the private gross domestic product.

Over the past two years, I have supported a record number of small business-friendly legislation passed by Congress to recognize this vital sector of our economy and encourage more Americans to become entrepreneurs. Here are a few highlights:

• In 2001, I supported the Economic Growth and Tax Relief Reconciliation Act. Containing tremendous rewards for small businesses (generally those with less than 500 employees) and the self-employed, this legislation helps nearly 17.4 million small businesses currently paying taxes at individual rates.

• The Tax Relief Act also repeals the estate tax, more infamously known as the death tax. The death tax stifles growth, kills jobs, discourages savings, ruins family businesses and farms, and penalizes middle-class entrepreneurs who spend a lifetime working and investing to provide for their families and communities. More than 80 percent of small employers must spend costly resources to protect their families from the death tax. Currently, 70 percent of small and family-owned businesses do not survive through the second generation and 87 percent do not make it through the third generation. In addition, 9 out of every 10 successors whose family business failed within three years of the owner's death said death taxes played a major role in their company's demise.

• This year, the House passed an economic recovery bill I supported to provide significant tax relief measures for small businesses. The Job Creation and Worker Assistance Act of 2002 allows small businesses to depreciate, or write off, new equipment and property more quickly than current law allows. In addition, this legislation permits small businesses to carry back net operating losses five years instead of two years.

• President Bush recently proposed more small business tax relief this year to help struggling small employers survive the tough times. Specifically, the President called on Congress to approve legislation increasing the amount of new investments small businesses can expense each year. Small Business Chairman Don Manzullo (R-IL) recently introduced legislation (H.R. 4087) to increase limits so that small businesses with new investments worth up to $325,000 could immediately expense up to $40,000.