The U.S. tax code is more than 54,000 pages long, much of it dates back 40 years, and it has become nearly impossible for the average person to understand. A broad array of experts agree that comprehensive reform is needed, but a top-to-bottom restructuring of the Code would be arduous and time consuming.
The House Committee on Small Business believes a targeted modernization of particularly outdated provisions can be accomplished in a short period of time—and without delay. Descriptions of seven such provisions—and recommendations on how to modify them—are the core of this report.
This Report by the Committee on Small Business of the U.S. House of Representatives highlights the following seven proposed solutions:
- Simplify the “Home Office” deduction provisions. Allow for a reasonable standardized deduction for people using their home as part of their business.
- Allow taxpayers who can prove substantial business use of electronic equipment to deduct a greater portion of the cost without having to keep detailed records.
- Allow a small business person who uses an automobile for work-related purposes over 75% of the time to recover the true cost of the vehicle (with a price of at least $25,000) during the standard 5- year recovery period. Continue to adjust the price for inflation.
- Allow small firms to use shorter depreciation schedules–that are in line with today’s technological and market realities.
- Allow self-employed entrepreneurs to deduct cost of health insurance premiums in the same manner as large firms.
- Raise the small business limit for deduction of business meals and entertainment to 80% or 100%.
- Restore incentives to prompt those with capital to invest their money in U.S. small businesses.