CompTIA White Paper Finds Tax Reform Paramount To Incentivize Growth And Innovation
CompTIA Celebrates Small Business Week with Release of White Paper and Blog Series on How Capitol Hill Is Affecting IT Entrepreneurs
In conjunction with National Small Business Week, May 12-16, CompTIA published a new white paper, SMB IT Views on Tax Reform. The white paper finds consensus and support among SMB IT executives for simplifying the tax code and relieving compliance burdens in order to create incentives for growth and innovation.
In tandem with the white paper, CompTIA also published a blog series that spotlights several of the current legislative issues affecting small business members.
CompTIA conducted a quantitative tax study of those involved in tax decisions at SMBs and found that specific tax code provisions and policies, such as the high corporate tax rate and complex tax compliance processes, constrain potential growth and impede its ability to remain globally competitive.
In the CompTIA tax study, 49 percent of those polled indicated that total resources required to satisfy tax filing and compliance requirements had increased over the last year. And 58 percent of small businesses reported they spend more than 40 hours per year dealing with federal taxes, with 40 percent using more than 80 hours per year. Of those surveyed, 46 percent spend more than $5,000 each year on tax compliance. These compliance costs – both time and compliance dollars – are in addition to the actual tax dollars owed.
“Tax reform should be a mechanism to promote additional growth and opportunity for small businesses. For the SMB IT industry, its strength relies on its ability to grow, innovate and adjust to market trends. SMB IT companies across the nation are providing services to all major industries from healthcare to agriculture. The success of these industries relies on the IT industry and the services they provide,” said Elizabeth Hyman, vice president, public advocacy, CompTIA. “While the industry remains strong, we must continually identify ways to mitigate the burdens on these companies in an effort to increase their growth potential, which translates into sustaining and generating high-paying jobs.”
CompTIA lays out four key principles of tax reform:
- Section 179 Expensing – Section 179 expensing allows small businesses to deduct the cost of certain asset purchases, as opposed to depreciating the acquisition cost over a period of years. This is a valuable incentive, enabling small businesses to invest in technologies that improve both productivity and the quality of goods and services. CompTIA SMBs realize a double benefit from this provision through purchases of needed equipment for their own businesses and through increased demand for technology equipment and systems that our members provide. Of those surveyed, 72 percent rated this provision as important or very important.
- R&D Tax Credit for the SMB IT – The existing R&E tax credit can only be offset against a company’s federal income tax liability; however, many small startup companies typically do not show a profit for a number of years and, thus, have no federal income tax liability. This means that under current law, these startup companies have no current tax benefit from the R&D tax credit. However, most all startups have employees and pay payroll taxes, against which the credit could be offset. Seventy percent of those surveyed support legislation that would allow small firms to offset their R&D tax credit against their payroll tax.
- Workforce Training Tax Credit – During the course of 2013, there were anywhere from 300,000 to 600,000 open IT and IT-related jobs in the U.S., according to Burning Glass Technologies Labor Insights (with 516,000 postings during Q4, 2013, alone). In many cases, these unfilled positions would not require advanced degrees or lengthy technical education. Accordingly, CompTIA supports efforts to enact a workforce training tax credit that will enable U.S. companies to fill these open positions by conducting much-needed workforce training. Creating a sustainable IT workforce – which can be accelerated by this tax credit – is an essential part of remaining competitive within the $3.6 trillion global industry. In CompTIA’s tax survey, 70 percent of those replying supported a federal tax credit for workforce training and development.
- Interstate Taxation Issues – SMB ITs are concerned about a number of interstate tax issues, especially because of the additional compliance burdens (and costs), including internet sales tax, digital download sales tax and business activity taxes. Over half (56 percent) of those polled noted the complexity of state tax filings outside of the firm’s home state.
CompTIA is the voice of the world’s information, communications and technology (ICT) industry. Its members are the companies at the forefront of innovation; and the professionals responsible for maximizing the benefits organizations receive from their investments in technology. CompTIA is dedicated to advancing industry growth through its educational programs, market research, networking events, professional certifications, and public policy advocacy. For more information, visit CompTIA (http://www.comptia.org/home.aspx).