Grassley: President’s Tax Proposals Are a Mixed Bag for Increasing Small Business Jobs
To: Reporters and Editors
Fr: Jill Gerber for Sen. Grassley, 202/224-6522
Re: Tax proposals in President’s proposed budget.
Da: Monday, Feb. 1, 2010
Sen. Chuck Grassley, ranking member and former chairman of the Committee on Finance, with jurisdiction over tax policy, made the following comment on the tax proposals in the President’s proposed budget, released today.
“The focus has got to be on jobs. Tax incentives that encourage job creation can help if they’re done right. The President’s proposed budget has some tax relief that’s generally agreed would encourage investment and hiring. I support eliminating the capital gains tax from new investments in small businesses. It’s something I included in my small business tax relief bill last summer. I also support extending the provision for small businesses to immediately expense up to $250,000 of qualified investments. My small business bill allows immediate expensing of up to $500,000. Small business owners say this kind of tax relief encourages investment and job creation. But the proposed budget also would increase taxes on households earning more than $250,000 per year. Non-partisan experts like the Joint Committee on Taxation says about half the revenue from those tax increases would come from flow-through businesses. Small business owners use these kinds of entities. The National Federation of Independent Business says about half of small businesses with 20 or more employees are owned and managed by the people these tax increases would hit. Also, the budget retroactively raises the estate tax, which is a big area of uncertainty for small business owners who otherwise might make investments that add jobs. We’d be shooting ourselves in the foot to raise taxes on the people who create jobs right now. And that would be contradictory of the President’s stated goal to shore up small businesses.
“Increasing the child and dependent care tax credit is something Congress did in 2001 when I was Finance Committee chairman. The Senate proposal was more generous than the House’s proposal, which ultimately prevailed. It’s something to look at because the cost of caring for children is a big expense. The expense can keep people from full employment and limit their earning potential.
“The proposed budget’s $300 billion in tax relief over the next 10 years for individuals, families, and businesses is mostly targeted and limited, often to people who don’t have to pay any taxes. The tax increases in the budget dwarf the tax relief. Everyone should be intellectually honest about that.”
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