The Senate has finally passed a bill to provide additional tax relief to America’s small businesses. The house passed a similar measure months ago, and will take up the Senate version for final passage next week.
There are many who rightly point to small businesses as our nation’s economic engine. Small businesses are where innovation begins and entrepreneurship is rewarded. Small businesses are also where most Americans go to work.
It is one thing to thank and encourage their enterprising spirit. It is quite another to actually put policies in place that help them when they most need assistance. Many of my friends on the other side of the aisle, including all but two who voted to kill this bill, talk about the importance of small businesses, but when it comes to actually voting for something that helps those in the trenches in this struggling economy, they say “no”.
Even the right leaning U.S. Chamber of Commerce supported this bill. It seems some have looked at their political fortunes and believe that they win if the American economy fails.
Betting against the American people is a mistake. Period.
In the Recovery Act and subsequent legislation in 2009 and 2010, Congress passed and the President signed the following eight small business tax cuts into law:
A new small business health care tax credit
A new tax credit for hiring unemployed workers
Bonus depreciation tax incentives to support new investment
75% exclusion of small business capital gains
Expansion of limits on small business expensing
Five-year carryback of net operating losses
Reduction of the built-in gains holding period for small businesses from 10 to 7 years to allow small business greater flexibility in their investments
Temporary small business estimated tax payment relief to allow Small businesses to keep needed cash on hand
Next week, Congress will forward, for the President’s signature, another eight tax cuts benefitting millions of small businesses. In the end, with help from two of our Republican Senate colleagues the bill which has been stalled for months, will finally provide additional tax relief for small businesses, including the following eight additional tax cuts:
Zero Taxes on Capital Gains from Key Small Business Investments: Under the Recovery Act, 75 percent of capital gains on key small business investments were excluded from taxes. The Small Business Jobs Bill temporarily puts in place for 2010 a provision that will eliminate all capital gains taxes on these investments. Key investments in 1 million small businesses would be eligible for this tax cut.
Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments: The bill temporarily increases for 2010 and 2011 the amount of investments in new plants or equipment that 4.5 million small businesses would be eligible to immediately write off to $500,000 – its highest limit ever – while raising the level of investments at which the write-off phases out to $2 million.
Extension of 50% Bonus Depreciation: The bill extends through 2010 a Recovery Act provision for 50 percent “bonus depreciation” for 2 million businesses, large and small, providing them with incentives to invest in plants and equipment by accelerating the rate at which they can deduct capital expenditures.
A New Deduction of Health Insurance Costs for Self-Employed: The bill would allow 2 million self-employed to deduct the cost of health insurance in 2010 for themselves and their family members in calculating their self-employment taxes. This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
Tax Relief and Simplification for Cell Phone Deductions: The bill would change tax rules so that the use of cell phones can be deducted without burdensome extra documentation – making it easier for virtually every small business in America to receive deductions that they are entitled to.
An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses: The bill would temporarily increase in 2010 the amount of start-up expenditures entrepreneurs can deduct from their taxes from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business.
A Five-Year Carryback Of General Business Credits: The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes – providing them with an instant tax break – while also allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses.
Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business: The bill would change the penalty for failing to report certain tax transactions from a fixed dollar amount – which was criticized for imposing a larger penalty on small businesses – to a percentage of the tax benefits from the transaction.
With many creditworthy small businesses still struggling to get the credit they need to grow, the Small Business Jobs Bill will also:
Create a new $30 billion Small Business Lending Fund
Establish a State Small Business Credit Initiative to strengthen state programs that support private-sector lending to small businesses
Extend successful Recovery Act provisions raising SBA loan guarantees and eliminating fees
Double the maximum size of most SBA loans
This bill, which will help millions of small businesses, is fully paid for and will not add to the deficit. Our small businesses in Missouri’s Fifth District and across the country have been waiting for the Senate to act on this bill for far too long. I am glad they finally moved this important bill.
Friday, September 17, 2010
Cleaver column discusses bills helping small businesses
In his latest EC from DC newsletter Fifth District Congressman Emanuel Cleaver discusses bills designed to help small businesses: