Small businesses feel left out of the federal jobs and tax debate

The Obama administration and Republicans each want a broad overhaul of the tax system to close loopholes and lower corporate rates, but small businesses that do much of the nation's hiring feel they're an afterthought in the debate.

"A lot of the conversation is dominated by topics that are really a focus of larger businesses," said Kristie Arslan, president of the National Association for the Self-Employed.

By government definition, a small business is one with fewer than 500 employees. To most Americans, however, the image of a small business is the self-employed contractor, a family restaurant or a mom-and-pop shop in a strip mall. Statistics suggest that 78 percent of small businesses have 10 employees or fewer.

These businesses rarely can take advantage of tax breaks for how they write off equipment purchases, or even the payroll tax holidays being proposed in the president's recent jobs plan. Their tax needs often are more basic and not addressed in either Democratic or Republican plans.

"It's inexpensive, or relatively inexpensive, small fixes that could be done in the tax code that could really have a profound effect," said Arslan, noting that more than half of all small businesses are home-based firms.

The group — which counts more than 200,000 members — wants a standard tax deduction for a home office. The qualifications for claiming such a deduction wouldn't change from the present system, but the self-employed could opt to take a standard $1,200 or $1,500 deduction instead of having to itemize and keep receipts.

The association also seeks a change to allow the self-employed to fully deduct their health care costs. Employers who hire workers are able to deduct from taxes what they spend on employee health care, and the employee is not taxed on the health care offered by their employer. The self-employed get no such break.

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