The majority party in each chamber has approved legislation to extend the Bush-era tax cuts for another year; however, the parties are divided on whether to continue offering relief to the wealthiest Americans. Senate Democrats first pushed though a measure that would allow the tax breaks to expire only for those earning annually more than $250,000 – a bill that was swiftly shot down by House Republicans, who later passed legislation extending the cuts for all income brackets.
Should the parties fail to reach an accord, taxes would rise a collective $7.5 trillion next year, which would likely drag the economy back into recession, according to the nonpartisan Congressional Budget Office. Economists have disputed the impact a tax hike on the rich would have on small businesses, with some arguing the Democratic plan would hit very few business owners, while others say it could cost them $200 billion in economic output and eliminate 710,000 jobs in the coming years.
Small business tax relief
Chair of the Senate Committee on Small Business and Entrepreneurship, Mary Landrieu (D-La.) last week introduced the SUCCESS Act, which would extend a number of popular tax breaks for small firms, including eliminating capital gains taxes on investments in small business stock. The bill would double the existing deduction for start-up costs and reduce the amount of time an S-Corporation is required to hold onto assets after converting from a C corporation.
Landrieu’s proposal would also ease restrictions on loans backed by the Small Business Administration and extend for one year a provision allowing business owners to use SBA 504 loans to refinance their commercial mortgages.
Previously introduced as an amendment to the Small Business Jobs and Tax Relief Act, which failed last month, the SUCCESS ACT has already enjoyed a small – but in the current climate on the Hill, notable – amount of bipartisan support. The amendment received 57 votes in the Senate, including a handful from Republicans.
The House last week approved legislation that would prevent the federal government from imposing new business regulations until the unemployment rate drops back to 6 percent. The measure would also prevent an outgoing president from implementing new federal rules between the election and subsequent inauguration, effectively tying President Obama’s hands after November should he fall to Mitt Romney.
Neither element of the legislation has any chance of approval in the Senate, but the bill continues to frame Republicans’ campaign argument that their political rivals stand behind government impediments to business growth.
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