Legislation which would extend tax breaks available for small business in the US will now not be considered until September after Congress failed to agree on a number of new amendments before the summer recess.
The Small Business Jobs Act of 2010 was introduced in Congress in June, but was first delayed as lawmakers rushed to complete the Wall Street regulation bill and then stalled as Democrats and Republicans argued over a number of amendments added by both sides.
The main thrust of the bill is towards the creation of a new lending facility to assist small firms trying to obtain credit from banks, many of which remain reluctant to lend to small businesses and start-up companies. However, the bill also contains a number of important tax breaks, measures which attracted broad Congressional support.
The legislation seeks to encourage investment in small businesses by allowing investors to exclude the gains from the sale of certain small business stock from their income for tax purposes if the stock is held for more than five years. The bill would also reduce the tax burden for small businesses by allowing them to carry back general business tax credits to offset their tax burdens from the previous five years. Additionally, small businesses would be able to count the general business credits against the Alternative Minimum Tax.
Another section of the bill would permit taxpayers to write off more of the cost of purchases for their business, such as equipment and machinery, in the year the purchase is made, and increase the types of purchases that would qualify for special expensing to include some types of real property, such as leasehold, retail and restaurant improvements.
Other proposals offered in the bill would double the amount of start-up expenditures that may be deducted by someone starting a small business, and allow self-employed individuals to deduct health insurance costs for tax purposes.
In his recent weekly radio address, President Obama accused Republicans of “holding America’s small businesses hostage to politics” by refusing to allow a vote on the bill.
“It’s a bill that includes provision after provision authored by both Democrats and Republicans,” he said. “But… the Republican leaders in the Senate once again used parliamentary procedures to block it. Understand, a majority of Senators support the plan. It’s just that the Republican leaders in the Senate won’t even allow it to come up for a vote.”
Senate Republican leader Mitch McConnell, however, countered that if anyone is to blame for holding up the bill, it is the Democrats.
“Our friends on the other side have outdone themselves,” he stated. “We first got on this bill in late June, and since then, Democrats have set it aside six separate times to move to something else. So from the beginning this bill clearly wasn’t a priority to them.”
With unemployment stubbornly high across the US, debate on the legislation, which Democrats claim will create an additional 500,000 jobs, is likely to form a key battle ground in the run up to the mid-term elections, and President Obama would be keen to put his signature on the bill before the November vote.
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