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- SMALL BUSINESS BIG
WINNER
- IN FINAL TAX
PACKAGE
- Agreement
Passes House with
- Senate
Passage Expected Friday
WASHINGTON, D.C. – Today, the U.S. House
of Representatives passed the $792 billion tax relief bill (H.R.
2488). A compromise between the House and Senate version of the tax
package, the Taxpayer Refund and Relief Act (TRRA) is a major
victory for small business. Included in the package are significant
small business priorities that respect the hard-working
entrepreneurial spirit that is the backbone of our economy.
House Small Business Chairman Jim Talent
(R-Mo) worked hard to ensure small business provisions were included
in the final tax relief package, introducing the Small Employer Tax
Relief Act (SETRA) and fighting for the American Community Renewal
Act (ACRA) to marshal many small business priorities. His efforts
were successful.
"It is important to the economy and to the
morale of small businesses for the tax code to respect the integrity
of entrepreneurs. For too long the tax system has penalized small
business: the harder you work the more the IRS can tax you. The
Taxpayer Refund and Relief Act recognizes that small businesses
surrender too much of their hard-earned money to government
bureaucracy. This bill reflects the importance of the
entrepreneurial spirit to the economic growth in our country," said
Talent.
VICTORIES FOR SMALL BUSINESS
IN TRRA INCLUDE:
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The American Community Renewal
Act. The tax bill includes Chairman Talent’s bill, the
ACRA, which will provide significant tax and regulatory
relief to help America’s poorest neighborhoods revitalize their
communities. ACRA has been a top priority of the Chairman
and the Committee, and it will foster significant small business
growth in our nation’s struggling communities. The ACRA
passed the House in the 1998 Taxpayer Relief Act, but tomorrow’s
expected Senate passage will be the first Senate vote on this
important legislation.
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Death Tax Repeal. Providing $65
billion in estate and gift (death) tax relief, TRRA repeals the
death tax by reducing its rates to zero by 2009. The death tax
causes the demise of 70% of small business in the second
generation and more than 87% in the third generation. This will
help thousands of families to continue the legacy of their family
farm or small business well into future generations.
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Capital gains tax relief.
Expected to offer $35 billion in tax relief, the measure reduces
the individual capital gains tax rates from 20 percent to 18
percent and from 10 percent to eight percent (for taxpayers in the
15 percent individual income tax bracket). In 2000, TRRA indexes
capital gains for inflation as well.
-
Increased health insurance
deduction for the self-employed to 100% immediately. The
Taxpayer Refund and Relief Act includes a SETRA priority to
provide small businesses the same benefits as large corporations
by allowing them to deduct 100% of their health insurance cost.
Self-employed taxpayers will be able to deduct 100% of their
health insurance costs in 2000, as opposed to 2003 under current
law. This will make health care more affordable for 5 million
Americans in self-employed families without health
insurance.
-
Improved health care options.
TRRA includes measures to make health care and long-term care more
affordable and accessible. The bill provides a 25% deduction in
2002 phasing up to 100% by 2006 for individual health insurance
premiums and long-term care insurance premiums; provides an
additional exemption (currently $2,750) for individuals who care
for elderly family members at home; allows employers to offer
long-term care insurance in "cafeteria" plans; and expands the
dependent care credit.
-
FFARRM Accounts. TRRA includes
Farm, Fisheries and Ranch Risk Management Accounts beginning in
2000 to allow farmers – the majority small businesses – to defer
20% of their annual income in FARRM accounts for up to five years
to help them in downturns and bad years.
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Increased meal expense deduction
for business to 60%. An important small business priority, the
tax relief bill gradually increases the meal deduction to 60% by
2007. Under current law, business taxpayers can deduct only 50% of
meal and entertainment expenses.
-
Increased small business expensing.
Current law allows taxpayers to expense up to $19,000 of the
cost of tangible trade or business property and equipment, and
gradually increases expensing to $25,000 in 2003. The Taxpayer
Refund and Relief Act allows expensing up to $30,000 beginning in
2000.
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Reduced payroll taxes by repealing
Federal Unemployment (FUTA) Surtax. In 1976 Congress
temporarily enacted the 0.2% surtax to repay government loans from
the federal unemployment trust funds. While Congress fully repaid
the loans in 1987, it has continued to extend the temporary
surtax. The Taxpayer Refund and Relief Act includes a SETRA
provision to repeal this unnecessary surtax. TRRA repeals the
surtax in 2004, thereby reducing payroll taxes on small employers
without affecting Social Security.
Now that the bill passed the House, the Senate
expects to vote on the legislation Friday. Once it clears both the
House and Senate, the bill will go to the President, where he has
promised to veto the legislation.
Chairman Talent hopes the President will not
play politics with this well-deserved tax relief, "Americans work
hard and are willing to pay their fair share, but Washington’s view
of ‘fair share’ has gotten out of hand," said Talent. "This bill
makes common-sense changes to relieve the tax burden of
entrepreneurs and families across the country. I hope the President
doesn’t hold tax relief hostage to larger political goals. It’s just
too important," Talent concluded.
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