The National Federation of Independent Business (NFIB) recently conducted a survey to determine which issues were most significant to its members. This outfit represents the interests of small businesses across America. In essence, they serve as a lobbyist for companies too small to hire their own lobbyist.
The survey identified five issues NFIB considered worthy of polling the membership about. I don’t know how the members voted, but I think the issues are interesting.
Not surprisingly, the first issue is permanent tax relief. The question is whether the Economic Growth and Tax Relief Reconciliation Act of 2001 (President Bush’s tax package) should be made permanent.
The tax package, signed into law June 7, 2001, provides taxpayers with more than $1.35 trillion in tax cuts, many of which benefit small business. This law will expire in 2010 and things will return to the pre-2001 status. Legislation has been introduced to repeal the “sunset” provision and make the tax cuts permanent. The impact of the new law is to gradually phase-out the estate (death) tax, lower income tax rates and increase the amount that can be set aside for retirement in qualified, tax-deductible plans.
Opponents argue that the tax cuts only benefit the wealthy and that a continued economic downturn would reduce, or eliminate, the projected surplus. Funding for Medicare and Social Security would be in jeopardy if this law were made permanent.
The second issue deals with mental health parity. The question is whether Congress should expand the scope of mental health parity requirements under current law to include a broader definition of mental illness, while also requiring more small businesses to offer such coverage.
Mental health parity requires employers and insurers who provide mental health benefits to offer the same insurance coverage for mental health services as for traditional medical and surgical benefits. The current law only applies to employers with more than 50 employees and allows employers to opt out of coverage when parity provisions increase coverage costs by more than 1%. The law narrowly defines mental illness as brain-based disorders. The current law expired on September 30th and is up for renewal and reconsideration.
Some members of Congress propose lowering the small employer exemption from 50 to 25 employees, while removing the 1% cost exemption and expanding parity to include a much broader definition of mental illness. Supporters of the changes say that disorders of the brain are no different than other medical disorders and should not be treated differently. Opponents argue that health insurance is already so expensive as to be prohibitive and the proposed changes will increase the cost even more.
The third issue addresses the tax exemption enjoyed by electric cooperatives. Under current law, electric cooperatives are tax exempt as long as 85% of their income is generated from their member/customers. However, in 1999 the IRS ruled that co-ops could enter other lines of business, such as propane distribution, home security, telecommunications, cable television, etc. The tax exemption extends to these activities as well as the core purpose of providing electricity.
Supporters argue that co-ops fill a vital role in supplying service to rural populations that have been ignored by commercial operators. To remain viable in a changing industry, co-ops must be able to offer more than just delivery of electricity. Needless to say, opponents argue that co-ops’ tax exemption gives them an unfair advantage over their competitors and their activities should be limited to delivering electric power.
The fourth issue asks whether employers should be required to record ergonomic injuries separately from other workplace injuries. Opponents argue that OSHA should be equally concerned about all workplace injuries and the separate reporting is a back-door attempt to develop data to further regulate ergonomics. Naturally, supporters say that OSHA needs this additional information to better fulfill its role in monitoring workplace safety.
The final issue is a tort issue relating to auto insurance. The question is whether Congress should allow a new auto insurance option permitting participants to give up the unrestricted right to sue for non economic damages (pain and suffering) in exchange for lower auto insurance premiums. The prospect of lower auto insurance costs is appealing to supporters. Naturally, the trial lawyer fraternity is frothing at the mouth at the mere possibility that this fertile field of litigation might be curtailed in some way.
Other than my unavoidable diatribe against the trial lawyers, I have attempted to present the issues with as little bias as possible in hopes that readers will consider the issues and decide for themselves how things should be. Perhaps in future columns I will analyze some of the issues in more depth as the situation unfolds.
Thought for the Moment – Next week is Christmas. To help get us in the Christmas spirit, I thought a quote from the New Testament might be inspiring: Today in the town of David a Savior has been born to you; he is Christ the Lord. — Luke 2:11
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at email@example.com.
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