President Trump and congressional Republicans have vowed to cut taxes, simplify returns and stimulate business growth. With many details to be fleshed out and negotiated, entrepreneurs are hoping for tax changes to encourage business start-ups, which have been sluggish.
The Bureau of Labor Statistics says creation of new businesses hit about 679,000 in 2015, up from the Great Recession low of 561,000 in 2010 but still shy of the record 716,000 in 2006. Even worse, jobs created by businesses less than one year old, though rising in recent years, have lagged, hitting about 3 million in 2015 compared to more than 4.7 million a year in 1998 and 1999.
In fact, many "new businesses" created in recent years are really just one-person shops set up by individuals who have lost their jobs, says Enrolled Agent Steven J. Weil, president of RMS Accounting in Fort Lauderdale, Florida. With no employees, they're not helping to build employment.
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"While these independent contractors are, in effect, in business for themselves, they are not truly in (a growing) business, since their primary interest is merely replacing the employment income they can't seem to find in a job," Weil says.
Many factors account for sagging new-business formation — from slow economic growth, to a widespread belief that starting a new company is just too difficult, to regulations and tight lending standards. But tax policies are culprits, too, according to start-up experts.
So what's on their tax wish list?
All sorts of things, of course, ranging from eliminating the alternative minimum tax and estate tax that hit many small-business owners, to offering tax credits for new hires, to eliminating the IRS's ability to judge whether executive compensation is appropriate. But here are the four broad categories that come up most.