A Preview of Small-Business Provisions
Today, the Senate is taking up two provisions affecting small businesses — the Small Business Jobs Act and competing amendments that would reduce tax paperwork for small businesses. Let’s preview what the Senate will debate and vote on.
First, the Small Business Jobs Act. It is a deficit-neutral collection of provisions aimed at helping small businesses grow and at convincing them to hire. It includes a $30 billion lending fund to encourage small community banks to grant cheap loans to small businesses. Other items include: $12 billion in tax breaks, such as reducing capital gains taxes for investments in small companies; an increase in Small Business Administration loan limits; and $1.5 billion for cash-strapped states to supplement their local lending programs.
Second, the Senate is considering two competing amendments changing the new “1099″ tax reporting requirement. In the health-care bill signed into law in March, the government included a new provision requiring small businesses to report the purchase of any goods or services worth more than $600 to the Internal Revenue Service. That would save the government some $17 billion in lost tax revenue over 10 years, but would prove a tremendous hassle for little companies.
Democrats and Republicans alike want to scrap the 1099 requirement. The question is how to make up for the lost revenue — given that the small-business bill needs to be deficit-neutral by Congress’ self-set paygo laws.
The Senate is considering two proposals: One by Sen. Bill Nelson (D-Fla.), supported by the White House, and one by Sen. Mike Johanns (R-Neb.), supported by Republicans and Sen. Blanche Lincoln (D-Ark.).
Nelson’s amendment increases the 1099 reporting threshold to $5,000 and exempts companies with less than 25 workers. It makes up the lost tax revenue by taking away a manufacturing tax deduction from oil and gas companies. (Naturally, oil and gas companies don’t like the idea.)
Johanns’ amendment repeals the 1099 requirement. It pays for its lost revenue, also controversially, by scrapping the public health and prevention trust fund created in the health-care law. The $15 billion fund included money for things like cancer screening and smoking cessation programs — initiatives Johanns’ office says can find funding elsewhere.