Disability Access

Individuals with disabilities who require an auxiliary aid or service should contact the committee chief clerk at (202) 224-5175 at least three business days in advance of the hearing date.
Council Chambers Lafayette City Hall, 705 West University Ave., Lafayette, LA

Chairman David Vitter

Small businesses are the job creators – not only in Louisiana, but across America as a whole; but when you consider the burden of tax compliance that’s placed on their shoulders, you may wonder how small businesses stay open at all.


Small businesses now rank the administrative portion of taxes as a greater burden than the financial cost. I don’t need to tell you as business owners about that burden because you feel it every day and so does every other small business in America. I want to describe it for the others here so they can better understand it and so it can be in the official Congressional record.


The federal tax code is approximately 74,000 pages long and is continuing to grow. Under the current administration, it’s already grown approximately 7,000 pages with no end in sight. And just for some perspective, the code was only 400 pages when it was first created.


Small businesses in the U.S. spend approximately 6 billion hours fulfilling their income tax obligations. That doesn’t even take into account state income taxes or sales tax that small business may have to handle. This slide shows us that over forty percent of small businesses spend 80 hours and over a quarter of all small businesses now spend more than 120 hours a year on tax compliance. Imagine if those billions of hours spent complying with IRS could be spent focusing on growing your company and what that would mean for our national economy and our Louisiana economy.


The cost of compliance to small businesses is 70% higher than bigger firms. In fact, as this chart shows, 1 in 3 small businesses spend more than $10,000 just on federal tax administration and half spend more than $5000. No offense to our accountant who is with us today, but a small business shouldn’t have to hire an accountant in the first place to start a business. It should be simple enough that you can take that money you would otherwise pay an accountant and invest that into your company.


So just for some perspective on all these facts I’ve just mentioned: that’s equivalent to over 50 King James Bibles, three 40 hour work weeks, and the cost of taking your family to Disneyworld, all for a small business owner just like you to comply with federal tax law each year. And I haven’t even mentioned the actual taxes themselves and how much those cost you.


You don’t have the army of accountants and tax attorneys that these “too big to fail” banks have at their disposal to take advantage of every nook and cranny of the code. No, you may only have you and a few others concentrating on the business side and if you are really fortunate, a CPA on payroll to worry about the taxes.


It’s an unfortunate truth, but Congress and the IRS simply do not lean towards the opinions of small businesses when crafting laws and regulations. But as Chairman of the Senate Small Business Committee, I’ve begun to change that, and that is what this hearing is all about today.


I’ve been listening to the concerns and issues of small businesses across this state and am once again here to listen today to your experiences and feedback. In response to that feedback, I am preparing to introduce legislation that can reduce some of that burden and address many of the issues that you have discussed with me. Just a few of the provisions include permanently extending Section 179 expensing, increasing the limit for cash basis accounting, eliminating burdensome record keeping requirements for business computer equipment, increasing the de minimus safe harbor threshold, and requiring the IRS to consult small business representatives before passing new rules and regulations that may affect them, among many others.


These are real solutions to real problems and I am confident they will be a first step to removing that burden altogether.