Q. Earlier this week, the Senate passed the Small Business Jobs and Credit Act, which contains a number of small business tax relief provisions. Where did these provisions come from?
A. In 2009, I introduced the Small Business Tax Relief Act, the CREATE Jobs Act, and the Small Business Penalty Relief Act. Most of the small business tax relief provisions included in the bill that passed this week are from those bills.
These provisions include: doubling the amount of equipment purchases that small businesses can expense, allowing small businesses to use the same credits that big businesses currently get to use, allowing small businesses to carry back certain business credits five years – which allows them to keep more of the money they earn, lowering the potential tax burden on C-corporations (double-taxed corporations) that convert to S-corporations (which are not double-taxed), providing self-employed small business owners the same tax treatment for health insurance costs that other businesses receive, and an extension of bonus depreciation – which allows a business to deduct half of the cost of certain property that it purchases in the first year that property is used, and reduction of the tax shelter disclosure penalties for small businesses.
Unfortunately, when the Senate passed these tax relief measures, a new, controversial program was added to the overall bill. It was a $30 billion mini-TARP, modeled after the original TARP bailout program that’s been so badly mismanaged. This program, which experts say could be ineffective and may encourage banks to lend to borrowers who aren’t creditworthy, harms the good done by the broadly supported tax relief for small business.
Q. What else needs to be done to help small businesses?
A. I would have liked to have seen an additional provision from my 2009 Small Business Tax Relief Act included in the final package. This provision would have provided small businesses with a 20 percent deduction off their small business income. It is unfortunate that this provision was left out. This was the largest and most important provision in my entire bill. The provision to repeal the 1099 reporting requirements enacted in the health care bill also was not accepted. These provisions would have done more to benefit small businesses than any other provision.
Above all, employers need greater certainty about tax policy and relief from costly regulations. The uncertainty and increasing burdens placed on small businesses by Washington inhibit new economic activity and get in the way of job creation.