Small Business Tax Modernization Bill Introduced
July 29, 2008
Despite the benefits from the economic stimulus plan adopted earlier this year that helped boost consumer spending, economic growth remains unsteady, due in part to the high energy prices and the ripple effects from the housing market mortgage meltdown. So on July 24, the House Small Business Committee held a hearing assessing the need for additional economic stimulus relief for small business and explored the next steps needed to improve market conditions.
During the hearing, witnesses praised the benefits of the stimulus package enacted earlier this year, and called for further targeted measures that would benefit consumers and financial markets. They highlighted that small businesses operate in virtually every phase of our national economy, leading the marketplace in job growth and production. All of the witnesses, urged the Committee to advance a second stimulus package that includes infrastructure spending, tax and regulatory relief for small businesses, and assistance to struggling families.
Emphasizing the important role small firms play in stimulating prosperity, Chairwoman Nydia Velázquez (D-N.Y.) introduced new legislation, the Small Business Tax Modernization Act of 2008 (H.R. 6601). The bill aims to address arcane tax codes that are burdensome to small business.
H.R. 6601 stems from a report released by the committee earlier this year which found unchanged tax codes since 1986 were not only burdensome to small business, but did not accurately reflect the modern day business environment as well.
The bill aims to significantly reduce and simplify parts of the tax code for small business. Specifically the bill would:
Create a standard home office deduction;
Remove cell phones from listed property;
Allow nonresident aliens to be S corporation shareholders;
Increase the deduction for business meals and entertainment for qualified small businesses; and
Reduce the recovery period for depreciation of heating, ventilation, air conditioning, and refrigeration (HVACR) equipment.
During introduction, Velázquez said "American entrepreneurs of the 21st century are ready to lead the way to financial recovery, but our tax system is so out-of-date that many can’t take full advantage of the opportunities before them. By modernizing the tax code to keep pace with today’s realties, we’re giving small firms the right tools and ensuring they keep America at the forefront of the global marketplace."
NSBA also believes that small business relief must be part of a second stimulus package to get the U.S. economy back on track. H.R. 6601 modernizes and simplifies an outdated tax code, increases access to capital, reduces record-keeping requirements and is an excellent step towards tax simplification for the myriad business owners in our nation. Since being introduced, H.R. 6601 has been pending in the House Committee on Ways and Means.
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