The House Ways and Means Committee today approved a Small Business Tax Incentives bill. Most of it deals with foreign tax credit limitations. The one part that seems even mildly pro small-business is the provision to release 100% of small business stock held for 5 years from capital gains tax, as long as it’s purchased between May of this year and 2011. Previously 75% of the gains were free of tax.
I’m trying to understand who this bill is supposed to help. I read the staff summary, which provided no real insight. Here’s what I come away with:
1. The provision will save small businesses a total of $2B over about 5-6 years. That’s really not much money, no matter who it helps.
2. Most small businesses are not structured as a corporation with stock, and don’t sell their businesses, so therefore can’t use this provision.
3. The only way I can see this helping small business is by increasing outside investments. Maybe VCs or Private Equity firms can use this. BUT, the house just passed a different bill that will treat their earnings as ordinary income, which would override this bill anyway.
My prognosis – this is useless to most small businesses. If Congress really wants to help small businesses, they’re going to have to do a lot better than this. The Hire Act was a good start, they should continue along that line.
What are your thoughts? I’d love to hear.
{ 4 trackbacks }