Another Shot at Tax Relief
A new Administration and new Congress mean a new playing field -- one on which small-business legislation has a better chance of winning passage. So says Craig Orfield, spokesman for Republican Senator Christopher S. "Kit" Bond, chairman of the Senate's Committee on Small Business.
Although the legislative package that Bond introduced on Jan. 25 -- the Small Business Works Act of 2001 -- contains proposals the Senate has rejected in the past, or which have failed to gain a Presidential signature, Orfield insists the climate in Washington has changed. "Anyone who rejects the bill as pro forma has their head in the sand," he says.
Small-business owner Terry Neese, co-founder of Oklahoma City-based political consultancy GrassRoots Impact, predicts the legislation will be passed by summer. "Especially right now, with the stock market down and some concerns about the economy, anything Congress could do to assist the small-business marketplace, it would do," he says. "We have a President in the White House now who will sign these pieces of legislation."
Bond's bill covers some hot-button issues for small-business owners, including:
Self-employed health-insurance deductibility. The 100% deductibility for health insurance would be effective as on January 1, 2001, rather than 2003, as currently scheduled. For now, such costs are only 60% deductible. This provision also would permit self-employed taxpayers to deduct health-insurance costs from their self-employment tax bill.
Alternative Minimum Tax. It would be repealed for individuals, at 20% a year over five years, and the AMT exemption for large corporations would be extended to small corporations.
Business-meal deduction. Such expenses could be deducted at 80%, rather than the current 50%, beginning with tax year 2001.
Equipment expenses. The value of equipment purchases that could be expensed each year would rise to $50,000 from the current $24,000.
Depreciation rules. Computer equipment and software could be depreciated over a two-year period rather than the current five years for hardware and three years for software. Also, the limits on depreciation of vehicles used to make sales calls and deliveries would be expanded.
By Theresa Forsman in New York