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Copyright (c) 1996 South Texas Law Review, Inc.
South Texas Law Review

ARTICLES: Federal Tax Policy: The Political Influence of American Small Business

January 1996

South Texas Law Review

37 S. Tex. L. Rev. 15


Ronald F. Wilson*


This Article analyzes the influence that American small business has had, and continues to have, on United States federal tax policy. Recognizing that U.S. tax policy is determined by the interaction of many complex factors, the analysis considers not only economic influences, but also political and other factors. Indeed, the political concerns of tax policymakers in Washington, D.C. are often paramount and small business advocates have proven to be quite adept at exploiting these concerns for the benefit of American small business.

I. Introduction

Before the early 1950s, the Internal Revenue Code contained no provisions that were intended specifically to benefit the nation's small businesses. 1 But as small businesses grew in number, so did their political influence in Washington, D.C. As their political influence increased, more and more Congressional hearings were conducted to evaluate the Code's effect, good or bad, on the American small business community. For a variety of economic, political, and philosophical reasons, small business has grown into one of the most powerful special interest groups in Washington. The Code is peppered with favorable tax incentives that give small businesses an advantage over their larger competitors, or, as small business proponents contend, help counteract the burdensome bias against small business that is inherent in the Code. Small business associations hold such extensive political power that during the 103rd Congress they were able to play a significant roll in blocking major health care reform legislation, even though the nation desperately needs the reform that such legislation ...
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