The burden of tax compliance is often much greater for small businesses than for larger enterprises. A new National Small Business Association (NSBA) tax survey indicates that a majority of small businesses spend around 40 hours preparing their tax returns, and 40 percent of small businesses spend double this time. According to the survey these small businesses consider the complexity of the tax system to be an important criterion in their business operations throughout the year. As more than 80 percent of small enterprises are so-called pass-through entities and the tax relating to their business income is actually paid by individuals through the individual income tax, the amount of work involved in operating the individual income tax system is far more than that required for other taxes.
The NSBA study concluded that most small businesses would give their support to a wide reform of the tax system and a reduction in corporate and individual income tax rates, even if this was accompanied by a reduction in the number of tax deductions and exemptions available. Around half the respondents to the study declared their support for a Fair Tax that would simply put into place a 23 percent tax on all goods sold that would be taken at the point of sale.
