In further remarks on the United States economy, President Obama has emphasized
that, while there is no single step that will reverse the economic damage wreaked
by the recession, the tax and investment incentives contained in the Small Business
Jobs Bill would benefit businesses and the economy immediately.
The bill was passed by the House of Representatives in June this year, but
is stuck in the Senate. Apart from leveraging loans for small businesses through
a lending fund for community banks, the bill would also provide tax incentives
on capital gains and grant small business tax penalty relief.
For example, the bill would increase from 50% to 100% the exclusion from gross
income of the gain from the sale or exchange of qualified small business stock
acquired after March 15, 2010 and before January 1, 2012, while also increasing
the tax deduction for trade or business start-up expenditures from USD5,000
to USD20,000 in 2010 and 2011.
The President professed that it would help small businesses “to get the
credit they need, and eliminate capital gains taxes on key investments so they
have more incentive to invest right now. And it would accelerate USD55bn of
tax relief to encourage American businesses, small and large, to expand their
investments over the next 14 months.”
He urged that the first thing done by Congress when it returns is to pass the
bill.
The legislation stalled in the Senate shortly before the summer recess when
Democrats failed to gain enough support for the bill to be put up for a vote.
While Republicans support the business tax breaks in principle, they have expressed
frustration at the number of Democratic add-ons to the legislation which, according to
Senate minority leader Mitch McConnell (R - Kentucky), are either "controversial"
or "completely unrelated" to the bill's intent.
Among the bill's offsets are increased penalties for failure to file an information
return with the Internal Revenue Service (IRS), and a new requirement for persons
receiving rental income to file information returns with the IRS and with service
providers reporting payments of USD600 or more during the year for rental property
expenses.
Senate Finance Committee Max Baucus has also proposed a substitute amendment
that would repeal tax breaks for the largest oil firms, including enhanced expensing
rules for drilling costs and the domestic production deduction.
USA-TAX-NEWS.COM 
