Tax legislation would favor small business

by Bryan Smith

SBJ Staff

As a battle rages over proposed tax legislation in Congress, Missouri lawmakers are waiting to see if benefits for small businesses will be approved.

The Small Employer Tax Relief Act, a bill proposed by Republican U.S. Rep. Jim Talent, of St. Louis, in May, was included in the Financial Freedom Act that passed through the House of Representatives July 22.

In addition, small business benefits are included in the Senate tax bill offered by the Senate Finance Committee and its chairman, Republican Sen. William Roth, of Delaware.

However, President Bill Clinton has threatened to veto the Senate tax bill if it comes to his desk.

"President Clinton wants to keep this money in Washington. He does not believe the American people deserve to get their money back," said Republican Sen. John Ashcroft, of Missouri. "He believes that he knows better how to spend it than the American people do."

Clinton and a number of Democrats argue that an estimated $1 trillion surplus in the budget should be used for improving Medicare, while GOP leaders want tax cuts.

The House proposal includes four provisions from Talent's small-business legislation. One clause includes increasing the health insurance deduction for the self-employed to 100 percent immediately.

Other stipulations include increasing the meal expense deduction for small businesses and increasing small business expensing.

"The Financial Freedom Act is important legislation for small businesses and their employees," said Talent, who serves as the chairman for the House Small Business Committee. "For too long Washington has stunted the growth and economic prosperity of this country through burdensome tax codes that penalize small businesses. The FFA effectively changes the codes so that small businesses will finally be able to keep more of their rightful earnings."

According to Ray McCarty, tax specialist with the Missouri Chamber of Commerce, the House's passage of the bill shows just how quickly the small business legislation caught on.

"The House (bill) built up some steam," McCarty said. "Within a couple of months, this thing went from ideas to passing the House."

The Missouri chamber is throwing its support behind the measures.

"The provisions included in the legislation are realistic, targeted measures that will enable America's small business to grow, invest and create more jobs," said Daniel Mehan, president and chief executive officer of the Missouri Chamber of Commerce. "It means a stronger future for the 900,000 Missourians who make their living by working for small business."

A press release from Republican U.S. Rep. Roy Blunt's office said about 270,000 residents of southwest Missouri would receive average tax cuts of $2,650 over the next 10 years. Blunt said his constituents are smart enough to know where their money will go if they don't get it back.

"Every southwest Missourian knows the longer the surplus stays in Washington, the more certain it is to vanish into an expanding and intrusive federal government," Blunt said.

The Senate tax cut bill, known as the Taxpayer Refund Act of 1999, is similar to the House proposal. The Senate legislation includes the health insurance deduction and increases expensing. It also includes a stipulation allowing farmer income averaging.

Ashcroft is supporting the bill.

"Senator Roth has offered an $800 billion tax cut over the next 10 years," Ashcroft said. "This tax cut is deserved, responsible and well within our means."

The Senate discussed the bill most of the day July 28, going back and forth on the benefits. Senate members expected to vote on the bill by the end of the week.

Sen. Christopher "Kit" Bond, who serves as the chairman of the Senate Committee on Small Business, is also supporting the Senate measure, and has expressed his willingness to speak for the legislation.

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