WASHINGTON - Tax reform legislation introduced last week by Ways and Means Committee Chairman Charles B. Rangel would provide overwhelming tax relief to America’s small business owners. H.R. 3970, the Tax Reduction and Reform Act of 2007 would help entrepreneurs and business owners grow their enterprises by eliminating the alternative minimum tax (AMT) and permanently extending the current enhanced small business expensing rules. The legislation also provides significant rate reductions for small businesses organized as taxable corporations. These provisions help reduce the tax burden on small businesses and encourage them to purchase new equipment for further growth.
""Like the rest of Americans, the overwhelming majority of small business owners will receive a tax cut under this bill," said Chairman Rangel. "This bill provides meaningful tax relief to millions of small business owners who are caught in the trap of the AMT and provides a permanent extension of expensing benefits to encourage small businesses to buy new equipment and promote further growth. This legislation is a combination of tax relief for individuals and corporations that will create growth at every level of the economy."
AMT repeal helps small businesses:
AMT repeal is particularly beneficial to small business owners, since the tax has the effect of denying other helpful benefits such as deductions for state and local income taxes and the research and development credit. According to the Heritage foundation, the number of small business owners subject to the AMT has more than tripled in recent years. Chairman Rangel’s bill provides relief to these owners through a full repeal of the AMT, offset by adjustments to current law that would not affect an estimated 96 percent of small business owners. According to statistics released by the U.S. Department of the Treasury, fewer than four percent of small business owners are in the income range that would have an increase in liability under the legislation.
Permanent extension of small business expensing:
The legislation also encourages small business owners to invest in the U.S. by permanently extending the largest tax benefit they enjoy, the ability to immediately write-off the first $125,000 annually of their business investment.
Lower corporate tax rate:
The Tax Reduction and Reform Act of 2007 reduces the top corporate tax rate from 35 to 30.5 percent. This reduction will apply to extremely small corporations, those having taxable income of more than $75,000.
