A few weeks ago, the House presented its Small Business Tax Bill. Today, the Senate introduced its own bill. While the two are similar in some ways, here are the highlights of the Senate bill:
1. Temporary exclusion of capital gains tax on small businesses held over five years. This is similar to the house bill.
2. Business loss carry over is improved, and would no longer subject to AMT.
3. SBA loan limits would be raised. As well as the creation of Small Business lending fund. I’m not really sure who this helps, as most small businesses I know are not trying to borrow right now.
4. Improvement in Section 179 write-offs, extending accelerated depreciation, including lease-hold improvements. This is actually useful.
5. Ability to deduct cost of health insurance when calculating self-employment tax. Also useful.
The offsets don’t seem too bad for most small businesses I know. The most important offsets are those forcing landlords to report more often to the IRS, and those allowing more ROTH IRA rollovers, which will raise money in the short term for the government.
Still, I think that these stimuli, which only add up to around $13B total, are doing too little for small business. Today’s payroll numbers show that small business payrolls are shrinking. In my opinion, we need a more aggressive bill.
