The U.S. House this week will consider three bills which would permanently cut taxes on small employers. ATR is very supportive of each of these bills, and encourages pro-taxpayer Members of Congress to vote for them.
H.R. 4457, “America’s Small Business Tax Relief Act of 2014,” is sponsored by Congressman Pat Tiberi (R-Ohio). It would make permanent a tax provision allowing small employers to expense (immediately deduct from taxable profit) up to $500,000 of equipment purchases per year. If current law is not changed, small businesses can only expense $25,000 of purchases for things like computers, office furniture, manufacturing equipment, etc. The rest must be subject to a slow, multi-year deduction process known as “depreciation.”
H.R. 4453 and H.R. 4454 are both sponsored by Congressman Dave Reichert (R-Wash.) These are two permanent tax cuts which make tax compliance easier for S-corporations, a common tax form for medium-sized, mature businesses. According to the IRS, there are 4.1 million S-corps with 7 million owners (S-corp owners pay the business’ taxes on their individual 1040s). The permanent law changes involve built-in gains and basis adjustments for charitable contributions.