The Senate Stimulus Package Has Even More Benefits For Small Business Owners
It’s far from being a done deal yet. But the senate stimulus package has even more benefits for small business owners than the House version did. Now, before you get too excited about that, you need to realize that the Senate package just cleared committee which only gives it the privilege of being voted on by the full Senate next week. But, assuming it passes the full Senate vote, and assuming the President signs it, this stimulus package will be very good for small business.
Neil deMauss wrote an excellent analysis of this Senate package for CNNmoney.com. Here are some excerpts:
The Baucus proposal (Senator Max Baucus–the Senate Finance C0mittee chair) would also allow accelerated depreciation of certain items, with an extra 25% allowed to be depreciated in each of the first two years after an item’s purchase. Assets eligible for bonus depreciation include tangible property being depreciated over less than 20 years, computer software, water utility property, and improvements to leased property. All could be depreciated even under the alternative minimum tax.
As in the House version, the Senate bill would also loosen limits on writing off taxes for new investments under Section 179 of the tax code.
Under current law, businesses earning up to $500,000 in annual revenue are allowed to deduct investments of up to $125,000, instead of depreciating them; both the House and Senate bills would allow businesses with up to $800,000 in annual revenue to deduct as much as $250,000 in Section 179 investments, which can include any tangible business purchases other than buildings. (Computer software is specifically cited as a qualifying purchase.)
Each business could apply for only one of the three special tax provisions, so that an entrepreneur taking advantage of the five-year writeoff, say, would not be eligible for bonus depreciation as well.
Taken together, the three provisions are estimated to provide more than $31 billion in tax savings for business owners in 2008, according to the Senate Finance Committee’s estimate, with an additional $30 billion spread out over coming years.
The Senate bill would also expand the number of individuals eligible for cash rebates to spur spending: anyone who paid payroll taxes in 2007 (not just net income tax payers), senior citizens relying on Social Security income, and taxpayers with incomes over $75,000 would get rebate checks as well. To help pay for this, the size of the checks would be reduced from $600 per person to $500 per person.
Another new provision would extend unemployment benefits by an additional 13 weeks, or an additional 26 weeks in states with high unemployment.
The NFIB, which had pressed for inclusion of more relief for small businesses in the stimulus package, says that while it’s pleased with the added provisions in the Senate bill, it’s most concerned that a bill is passed, and soon.
“Getting that money out into the economy as soon as possible is the most important issue at this point,” says Rys.
The Senate, at least, seems poised to do just that.
While this doesn’t solve all of Small Business’ problems, it certainly gives it a shot in the arm in an attempt to cushion the blow of a recession should it actually happen. Keep an eye on what happens here and stay very close to your tax adviser to make sure he’s up on all of the new things coming down the pipeline.
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Mike Harmon
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