NEW YORK —
Camp, the Ways and Means chairman, released what he called a bipartisan discussion draft of proposals to reform tax rules that affect small businesses. The draft, which Camp said was being circulated so the public can offer feedback, is intended to be part of an overhaul of the entire tax system. Other suggestions in the draft included a doubling of the deduction for startup costs and later tax return filing deadlines for small corporations.
Groups that lobby on behalf of small businesses say circulating the proposal publicly before it becomes a bill is a good move.
"This is the first time that I can recall when there's been a tax reform discussion framed this way," says Todd McCracken, CEO of the National Small Business Association. "The idea of putting it above board for comment is really kind of refreshing."
The NSBA likes the idea of a permanent Section 179 deduction, although McCracken says his group would like to see a higher amount.
Small businesses shouldn't be subject to a limit on deducting equipment purchases, says Karen Kerrigan, CEO of the Small Business & Entrepreneurship Council. Under current law, when a company reaches the limit, it must use depreciation to deduct amounts over $500,000, a process that takes years.
Given the fighting in Congress over taxes — most recently, the yearend battle over tax rates for the wealthiest people — and the current focus on cutting the budget deficit, it's hard to predict how the Section 179 proposal will fare. Camp has said that tax cuts must be offset by tax increases elsewhere. Lower taxes for small businesses would likely mean higher taxes for someone else — which could make it a tough sell in the current climate in Congress.
"It's hard to handicap this stuff right now," says Arensmeyer, the Small Business Majority CEO.
But Kerrigan thinks the proposal has a good chance of becoming law because it has bipartisan support in Congress, and because it appeals to small businesses.
"It's something that small business can look to and say, 'this can make a difference for my firm,'" she says.