The Small Business & Entrepreneurship Council (SBE Council) declared that a move by the Internal Revenue Service to impose new federal income taxes on individuals with company-issued wireless devices is a picky initiative that will impose more burdens and costs on small firms and their employees.
According to a Wall Street Journal news report, millions of Americans could face higher income taxes due to a portion of their annual employer-issued phone expenses being assigned as a fringe benefit.
Karen Kerrigan, president and CEO of SBE Council, said: "Health benefit taxes, cell phone taxes - what's next? This is another nuisance tax that will add costs and burdens for small businesses and their employees. There will be increased tax compliance costs, and lost business for the wireless industry and manufacturers as many firms will simply choose to cancel contracts. None of this is good for the economy, or makes sense."
The Small Business Administration (SBA) Office of Advocacy reported in 2005 that the per-employee cost of regulation for small business was already a staggering $7,647. Tax compliance for small firms is 67 percent higher than for larger businesses, according to Advocacy's study.
SBE Council chief economist Raymond J. Keating added: "This is the type of tax policy one gets when government spending is careening out of control. Every nook and cranny is explored for more dollars to drain from the private sector, while costs of tax compliance rise. The right answer is to simply repeal the 1989 law requiring workers to track and pay income taxes on company-provided mobile phones. It's outdated, and does not reflect the reality of business today."
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