NEW: Reed Seeks Tax Breaks for Small Business Investment, Hiring
Tuesday, March 27, 2012
In an effort to spur hiring and boost investment in new equipment, U.S. Senator Jack Reed (D-RI) on Monday announced his support for new legislation to help Rhode Island small businesses hire more workers and invest in their growth. The Small Business Jobs and Tax Relief Act of 2012 is designed to give small businesses a 10-percent tax cut for hiring new workers or raising employee pay and will allow businesses to fully deduct the cost of significant investments made this year. The $26 billion tax cuts would be temporary and apply only to 2012 wages and investments.
“Rhode Island’s unemployment rate is too high and we need to do everything we can to help create jobs. Small businesses are vital to our communities and our economy. One key step we can take is providing targeted, temporary tax relief that could help local small businesses hire more workers and invest in new equipment and machinery,” said Reed. “This isn’t the only bill we should pass to help our economy: We need the House of Representatives to pass the job-creating highway and transit infrastructure bill. We need to preserve low student loan rates so middle-class kids can go to college and get education and training for the jobs of the future. And, we need to expand SBA lending programs so small businesses have access to credit. These are the kind of common-sense steps we need, but all too often they’ve run into Republican resistance and intransigence.”
The Small Business Jobs and Tax Relief Act will:
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTCreate an Incentive For Small Businesses to Add New Jobs This Year. Although the economy is recovering from a severe economic recession, a tax credit designed to stimulate job creation and wage growth could help put more Americans back to work and provide tax relief targeted at America’s small businesses. This proposal would provide a 10 percent income tax credit on new payroll—through either hiring or increased wages—added in 2012. With a maximum increase in eligible wages of $5 million per employer and the amount of the credit capped at $500,000, the benefits of this tax credit will be targeted on America’s small businesses.
Extend 100-Percent Depreciation Deduction For Certain Property. Typically, businesses expenditures are tax deductible in the year in which they are made, except for major purchases (such as large equipment or buildings), which must be written off over many years. One hundred percent depreciation allows businesses to write off the entire cost of major purchases in the year they are made rather than depreciate those expenses over many years. By accelerating in time the recovery of investment costs through “bonus depreciation,” additional first-year deductions for new investment lower the after-tax costs of plants and equipment. This encourages new investment and promotes economic recovery. Senate Democrats propose extending 100 percent first-year depreciation for one year, effective for qualified property acquired and placed in service before January 1, 2013 (or January 1, 2014 for certain longer-lived and transportation property).
Last week, Senator Reed offered legislation to expand the capacity of the Small Business Administration’s (SBA) Small Business Investment Company program (SBIC), and extend for one-year the SBA’s 504 refinance loan program to help firms refinance commercial real estate into long-term, fixed-rate loans. These programs have helped create and save hundreds of thousands of American jobs at minimal cost to taxpayers.
Reed’s amendment also sought to renew the Export-Import (Ex-Im) Bank to help American exporters compete in a global economy and sell more of their products overseas. The Ex-Im Bank aids thousands of companies in the export of American goods and services through a variety of loan, guarantee, and insurance programs. Its programs made $41 billion in U.S. exports possible last year alone. His amendment was filibustered by Republicans.
