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House Tax Writers Approve Small Business Relief Bill

by Leroy Baker, Tax-News.com, New York

14 February 2007


The House Ways and Means Committee has passed the Small Business Tax Relief Act of 2007 by unanimous consent, although the legislation has attracted criticism from a senior Senate tax writer for not going far enough to close loopholes that facilitate tax avoidance.

The bipartisan legislation was introduced last Friday by Ways and Means Chairman Charles Rangel and Ranking Member Jim McCrery, and is expected to be considered by the full House of Representatives later this week.

The bill is a revenue-neutral package that would extend tax provisions for small business owners and pave the way for the House and Senate to agree on legislation to raise the Federal minimum wage from $5.15 per hour to $7.25 per hour.

“It is with great honor and pleasure that I call to order the first legislative markup of the Committee on Ways and Means in the 110th Congress," announced Rangel. "The legislation before us today is the product of a bipartisan effort of Democratic and Republican staff along with the non-partisan expertise from the Joint Committee on Taxation."

Rangel added: “I cannot think of a better way to start off the new Congress than by marking up a bill with the depth of bipartisanship we have here. I have worked together with Mr. McCrery to draft a bill that helps strengthen economic opportunity for small business owners and I will continue working with him to ensure that this important piece of legislation reaches the President’s desk and becomes law."

Over in the Senate, which has approved more than $8 billion in tax relief to partner the minimum wage increase, the House package has received a mixed response from the tax-writing Finance Committee. While Chuck Grassley, Committee ranking member, welcomed the inclusion of tax breaks in the House bill, he bemoaned the lack of provisions to further tighten laws against tax shelters such as SILOs (sale-in-lease-out) and offshore corporate inversions, and warned that companies will continue to be able to "pull a fast one" against the Treasury.

“Thank goodness the House Democratic leaders changed their mind about getting a minimum wage/small business tax relief package passed," he remarked.

However, he went on to add that: "There’s no good reason to delay passage of our measures to close loopholes and shut down tax shelters. It’ll be pretty disappointing if the new leadership of Congress fails to live up to its reform rhetoric by abandoning these reforms. For example, companies that rushed to beat our crackdown on corporate inversions and opened a post office box in Bermuda to avoid US taxes will celebrate that they pulled off a fast one."

Grassley concluded: "By not passing the crackdown on leasing deals, we’ll force the IRS to continue investing resources to challenge depreciation deductions claimed by US banks on foreign subways and sewer systems. We all know the IRS has better things to do, like answer taxpayers’ questions.”


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