Lockport Union-Sun & Journal — U.S. Rep. Chris Collins has signed on with a proposal to let startup businesses in some economically distressed areas defer payment of federal payroll taxes, in order to improve those businesses’ chances of succeeding.
Collins is the first co-sponsor of the proposed Main Street Revival Act, introduced in the House of Representatives last month by Rep. Eric Swalwell, D-Calif.
The act would allow startup small businesses in Historically Underutilized Business Zones to postpone payment of employee payroll taxes for one year, then pay the owed amounts in equal installments over the following four years.
Collins visited downtown Lockport on Tuesday to talk up the act, which he characterized as common-sense, bipartisan and non-controversial. He was joined at a press conference by Mayor Michael Tucker and Niagara USA Chamber director Deanna Brennan, both of whom endorsed the proposal as supportive of much needed local new-job creation.
The thinking behind the Main Street Revival Act is that it would help increase the likelihood of startup businesses surviving the critical first year of operation.
Supposing the annual average payroll tax per employee is $3,000, and a business could defer paying it for five employees, the owner would have $15,000 extra cash on hand to put into marketing, equipment acquisition or something else that helps grow the business, Collins, an experienced small business operator, suggested.
“When you’re starting up, cash is king. ... It’s that first year you’re always out of cash,” he said. “I think (payroll tax deferment) could work. Every little bit helps.”
The act would postpone, not waive, collection of first-year payroll taxes from startup employers. The country cannot afford to waive them, Collins said.
The Main Street Revival Act would not cause any reductions in the Social Security or Medicare trust funds, he added.