This ad will close in

Let Them Eat Cake

When it comes to small business, a new tax-cut bill is half-baked.

With the 2004 congressional session drawing to an end, small-business advocates were trying to get at least a thin layer of icing applied to the big-business tax cut cake coming out of the Capitol Hill oven. The rich confection, baked by both Republicans and Democrats, was the bill instituting numerous new tax incentives for U.S. manufacturers, who would no longer have access to the Foreign Sales Corporation/Extraterritorial Income (FSC/ETI) tax regimes declared illegal by the World Trade Organization.

Supporters of small businesses who are on the Senate-House conference committee attempted to add a uniquely small-business amendment to the FSC/ETI bill, which was almost sure to pass Congress and be signed by President Bush. That amendment would enhance the Section 179 expensing provision included in the Jobs & Growth Tax Relief Reconciliation Act of 2003. The bill increased the amount of equipment small businesses may expense from $25,000 annually to $100,000, but only through the end of 2005.

On July 21, the House extended the $100,000 for two more years (until 2007) when it passed another bill, the Tax Simplification for America's Job Creators Act of 2004. It included another important small-business provision as well: indexing for inflation the current $5 million per year in gross receipts ceiling on who can use the less complicated "cash basis" method of accounting. Small businesses above that ceiling must use accrual accounting, which is more complicated, time-consuming and costly.

The Senate did not have time in September to take up the House bill. Instead, Sen. Olympia Snowe (R-ME), chair of the Senate Committee on Small Business and Entrepreneurship, pushed for inclusion of some Section 179 enhancement in the FSC/ETI conference committee. Given that the size of the FSC/ETI cake was already making it hard to pull from the oven, there was a better chance that conferees might add some limited Section 179 relief to the bill-cash accounting relief was considered too much yeast.


Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.

Like this article? Get this issue right now on iPad, Nook or Kindle Fire.

This article was originally published in the November 2004 print edition of Entrepreneur with the headline: Let Them Eat Cake.

Loading the player ...

Tim Ferriss on Mastering Any Skill

Ads by Google

0 Comments. Post Yours.

Most Shared Stories

1
The 3 Attributes to Look for in Top Talent
2
5 Key Characteristics Every Entrepreneur Should Have
3
14 Books Every Entrepreneur Should Read in '14
4
Steve Jobs' 13 Most Inspiring Quotes
5
The 7 Books Every Entrepreneur Needs to Read When They're Discouraged

Trending Now