Small business tax breaks…or not

President Obama often speaks about the 18 or so tax breaks for small business that have been passed under his watch.  So, when I saw an article about these tax breaks last week, it peeked my curiosity.  Businesses aren’t taking them.  Why?

Because they are so complex, it isn’t worth the time and effort.

Out of 1.78 million corporate tax returns in the U.S., only about 20,000 claimed any of the main business tax credits in the code, according to the IRS.

There is a tax break for energy efficient buildings.  But, it,

…often requires computer modeling costing as much as $50,000.  That leaves business owners weighing whether the [tax] credit is worth the expense.

And then there is the Work Opportunity credit which was targeted at businesses that hire disadvantaged groups, such as those on food stamps or welfare.

It requires extensive paperwork for each worker for whom it is claimed and the paperwork can often take a year or more to process.

Recently, the IRS dispensed with the requirement that the forms for this credit be hand-signed!

Then we have the credit for small businesses providing health care coverage for their employees.  It,

…was claimed by only about 173,000 employers, out of an eligible pool of between 1.4 million and four million businesses, according to the Government Accountability Office.  ‘The calculation was ridiculous’, says Barbara Webber, property manager for Presidential Estates in Quincy, Mass., an owner of apartment complexes…

And, Ms. Webber has an accounting background.

While many companies say it is too complicated to claim tax breaks, the ones who try can find themselves embroiled in complex disputes with the Internal Revenue Service.

I well understand that we need to make sure that only those entitled to the tax breaks receive them.  But enacting tax breaks that few small businesses can take unless they hire a fleet of accountants and lawyers is silly, unless Congress simply wants to say they enacted tax breaks for small business.

What good is a tax break if no one can figure it out, or, if they do, afford to spend the money it takes to get it?


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The Sound Off Sister was an Assistant United States Attorney for the Southern District of Florida, and special trial attorney for the Department of Justice, Criminal Division; a partner in the Florida law firm of Shutts & Bowen, and an adjunct professor at the University of Miami, School of Law. The Sound Off Sister offers frequent commentary concerning legislation making its way through Congress, including the health reform legislation passed in early 2010.


  1. Dimsdale on July 31, 2012 at 9:30 pm

    Maybe the title should be “Tax breaks small business”….?? 😉
    This is doing for small business what ?bamacare will do for patients.

  2. Plainvillian on July 31, 2012 at 9:46 pm

    Condition: regulatorysclerosis
    Treatment: Flat tax

    • chetisyourbet on August 1, 2012 at 4:46 am

      I like the flat tax idea.
      Imagine a mandatory $100 per year head tax on all citizens that would raise $31,406,845,200
      A Mandatory small business tax of $1500 per year (let’s take the low number above of 1.4mil small business) would raise $2,100,000,000 (large number) would raise $6,000,000,000
      A mandatory Large business/multinational business tax (including banks) using the number of 150,000 large and multinational business including banks, at $50,000 per business would raise $7,500,000,000.
      For a grand total of? $44,906,845,200? per year and growing.? Now take away some of the over reaching EPA restrictions on industry and we could raise more via large business and even on some small businesses.? I am not talking about pollution reduction rules but the ones like not allow a factory to build because of a rare cricket or beetle, and ones like not allowing a pipeline to cross national park lands.

  3. JBS on August 1, 2012 at 9:41 am

    More b.s. from our tax and spend Zero. He can stand and pontificate that his regime has all of these tax breaks for small businesses . . . LOL. Small businesses are the target of this regime’s insatiable lust for more and more tax revenues.
    “You didn’t build that. . .” is just code for “you don’t deserve to keep that.”
    More Lefty political stagecraft.

  4. Lucinda on August 1, 2012 at 9:54 am

    I work for one of the small businesses that claims the health insurance credit, and the accountant hates it, because it’s such a pain to figure.

  5. Tim-in-Alabama on August 1, 2012 at 12:07 pm

    Just more whining from ungrateful, greedy business owners who don’t appreciate what’s good for everyone.


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