Obama Pushes Small Business Tax Incentives

by Mike Godfrey, Tax-News.com, Washington

23 August 2010

In a statement before going on holiday, the United States President, Barack Obama, urged Congress to approve the small business tax incentives contained within the Small Business Jobs bill.

The bill was passed by the House of Representatives in June this year, but is stuck in the Senate. Apart from leveraging up to USD300bn in loans for small businesses through a USD30bn lending fund for small- and medium-sized community banks, the bill would also provide USD3.5bn in tax incentives to spur investment in small businesses and the formation of new small businesses, and grant small business tax penalty relief.

Amongst other measures, the bill passed by the House 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.

In addition, the penalty for failing to disclose a reportable transaction (a transaction determined by the Internal Revenue Service as having a potential for tax avoidance or evasion) would be limited to 75% of the decrease in tax resulting from the transaction.

President Obama reiterated that supporting small businesses was vital in the fight to maintain and add to jobs in the US economy. He pointed out that, “in the final few months of last year, small businesses with fewer than 50 employees accounted for more than 60% of the job losses in America. These are the businesses that usually create most of the jobs in this country.”

He said that “the jobs bill that is stalled in Congress would completely eliminate taxes on key investments in small businesses.” He also confirmed that “this legislation is fully paid for and will not add one single dime to our deficit.”

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