WASHINGTON – United States Senate Committee on Small Business and Entrepreneurship Chair, Mary L. Landrieu, D-La., today held a hearing entitled “Assessing the Regulatory and Administrative Burdens on America’s Small Businesses.”  Testifying before the Committee were Chief Counsel for U.S. Small Business Office of Advocacy and a Director specializing in tax issues with the U.S. Government Accountability Office as well as other small business tax experts. 

“Our job here is not done; it is only just beginning,” Senator Landrieu said in her opening statement.  “I am committed to reducing any unnecessary administrative and regulatory red tape small businesses face every day in their fight to get our economy back on track.

“For months, I heard from small businesses all over the country that the expanded Form 1099 reporting requirements just didn’t make sense and would unreasonably burden small businesses.  As it is now, according to testimony we heard today, the cost of tax compliance for small businesses is over 300% greater, per employee, than the cost to large companies.  This disproportionate administrative burden is just one of the many examples of the extra hurdles small businesses must clear to compete.”

“When Federal government regulations do not account for the unique challenges that small business owners face.  Small businesses employ approximately 50 percent of the U.S. workforce.  At a time when we are working to create jobs, we cannot afford to reduce the number of small businesses that employ this nation.”  

This week, Senator Landrieu sponsored the bipartisan Small Business Paperwork Relief Act with Finance Committee Chairman Max Baucus, a bill that repeals the expanded Form 1099 requirements put into effect by the health care reform legislation signed into law this year. 

The Federal regulatory burden on small businesses continues to grow every year.  According to a recent report published by the SBA’s Office of Advocacy, as of 2008, the total annual cost of Federal regulations in the United States increased to more than $1.75 trillion.  If you broke that down by cost per U.S. household, each family would be responsible for more than $15,000 of the annual cost.  However, the distribution of these regulatory costs is uneven and will disproportionately affect small businesses.  Advocacy estimated that the average burden per business was approximately $8,000 per employee in 2008.   In fact, small business with fewer than 20 employees incur regulatory costs 42 percent greater than firms with between 20 and 499 employees, and 36 percent greater than firms with more than 500 employees. The regulatory cost per employee for small businesses was $10,585, compared to $7,454 for medium firms and $7,755 for large firms.

A complete list of witnesses, as well as copies of their testimonies, can be viewed by clicking here.

A copy of Senator Landrieu’s opening statement can be viewed by clicking here