The Democrat-heavy Congress sworn in this past January has a long list of tax changes. Mel Schwarz, partner in the National Tax Office at Grant Thornton LLP in Washington, DC, sizes up the likely moves in '07. But whatever Congress passes still needs the president's OK.
Estate tax: This law is currently a mess, with changes every year. Now that Republican estate tax-repeal efforts are dead, Democrats may be able to find a compromise. One possibility: Freeze the estate tax at the 2009 rate of a $3.5 million exemption and a 45 percent top tax rate.
Minimum-wage breaks: Senate lawmakers would like some $8.3 billion in small-business tax breaks to offset the planned minimum-wage hike. The biggest giveback is a $3.6 billion extension of the Work Opportunity Tax Credit, which gives business owners a bigger tax break on wages paid to underprivileged workers.
Other likely breaks include more deductions for restaurant and retail store build-out costs, and an expanded Section 179 rule, allowing more capital purchases to be written off in a given year.
Expiring breaks: Key tax breaks expiring at year-end include the Alternative Minimum Tax, which will ensnare much of the middle class in '08 if a higher income cutoff isn't passed; the Research and Experimentation Tax Credit; and the sales tax deduction for states with no state income tax.Seattlewriter Carol Tice reports on business and finance for The Seattle Times, Seattle Magazine and other leading publications.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.