One week after House Republicans introduced a bill (H.R. 9) to provide businesses with less than 500 employees a 20 percent tax deduction on their profits, Senate Majority Leader Harry Reid (D- Nev.) offered an alternative to the Small Business Tax Cut Act. The Senate Democrat's proposal (S. 2237) offers a tax break for any company that expands its payroll and offers incentives for companies to buy new equipment by extending 100 percent bonus depreciation through 2012. The bill offers companies a tax credit equal to 10 percent of the amount their payroll was increased for 2012 capped at $500,000
Senate Democrats say the Small Business Jobs and Tax Relief Act should grow jobs and the economy in the U.S. by giving companies an incentive to hire more and to pay more to their current employees and by allowing them to deduct the full cost of new equipment bought in 2012.
Neither bill includes revenue offsets, which can often be more controversial than the underlying bill. Nonetheless, both the House and Senate plan to take up their respective bills the week of April 16th. Given the popularity of 100 percent bonus depreciation among both parties, an agreement may be possible if centered around this provision.
Prepared Mar. 27, 2012 by Brad Duca (firstname.lastname@example.org), legislative aide, Government Affairs, Financial Executives International (FEI). This summary does not represent FEI opinion specifically noted above.