Bush Iraq Bill Veto To Kill Off Small Business Tax Cut Package

by Mike Godfrey, Tax-News.com, Washington

30 April 2007

America's small businesses face a longer wait for tax breaks designed to offset the cost of an increase in the federal minimum wage despite the Senate's approval last week of a tax package within a military spending bill.

This is because President George W. Bush has pledged to veto the Iraq war supplemental bill, which the White House argues leaves the US military campaign in Iraq inadequately funded.

The $4.84 billion package of tax incentives would have provided a number of tax breaks to small firms affected by the proposed increase in the minimum wage to $7.25 per hour from $5.15 per hour, but has been derided by Republicans for failing to provide adequate tax relief; commenting on the package last week, Chuck Grassley, ranking member of the Senate Finance Committee dismissed the package as a "shriveled peanut", and the White House had even threatened to block a stand-alone package of tax cuts unless they are beefed up.

Responding to the looming threat of presidential veto, Sen. Max Baucus, Finance Committee Chairman and one of the principal authors of the tax legislation along with House Ways and Means Committee Chairman Charles Rangel, defended the proposals.

“The small business tax relief contained in the supplemental spending bill would do good things for America’s small businesses, from giving employers credit for hiring disadvantaged workers to helping family-owned businesses get the full tax benefits they deserve," he stated. "Rather than grousing about what’s not in this tax package, Congress should jump at the opportunity to help small businesses and to close tax loopholes now in legislation that can pass both chambers, and work together to look for additional opportunities. I’ve already pledged to revisit additional provisions, such as restaurant and retail depreciation and a number of tax loophole closures, in short order."

“We all know the President plans to veto this bill. But it’s particularly disappointing that the White House is already promising to oppose this package of small business tax relief if it moves forward as stand-alone legislation. Bottom line, the White House shouldn’t stand in the way of steps to help America’s small businesses," Baucus continued, adding: "I might also note that we included three of the administration’s proposals to help collect unpaid taxes in this package, as well. This won’t be the last tax bill of 2007, and I believe we should take the first opportunity to help the small business owners who make our economy strong.”

Addressing reporters after the Senate vote last week, White House spokesperson Dana Perino confirmed that President Bush will follow through with his threat to veto the bill.

"I just spoke to the President in the Oval Office, and as he said he would for weeks, the President will veto this legislation, and he looks forward to working with congressional leaders to craft a bill that he can sign. It is amazing that legislation urgently needed to fund our troops took 80 days to make its way around the Capitol, but that's where we are."

Although it is unclear when Bush intends veto the legislation, he has said that he wants to work with the Congressional leadership on a clean bill.

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