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Senator Smith Offers Boost for Oregon Small Business Owners
Creates New Incentives for Investing in Employees’ Retirement |
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September 7th, 2006 - WASHINGTON, DC - Looking to simplify the burdensome federal tax code for America’s number one job creator, U.S. Senator Gordon H. Smith (R-OR) introduced Wednesday the Bring Opportunity to Our Small Business Taxpayers Act (BOOST Act). The legislation makes permanent certain expensing mechanisms that create capital for new jobs and investment, as well as additional incentives for employers to contribute to their employees’ retirement plans.
“We are choking our number one job creators in paper work,” Smith said. “The federal tax code is far too complex, inhibiting a small firm’s ability to grow and create new jobs. Putting certainty in the place of punishing tax penalties will help transform the tax code into an enabler of pay increases and new jobs not an obstacle to prosperity.”
Senator Smith’s legislation will help Oregon firms known as S-corporations. An S-corporation is a type of small business. The legislation makes the following reforms:
- Makes the $100,000 small businesses expensing deduction permanent for firms that invest up to $400,000 a year. The recently enacted Tax Increase Prevention and Reconciliation Act extended this provision through 2009.
- Reforms how the federal tax code treats the reporting of income from long-term contracts
- Codifies existing U.S. Treasury Department regulations that allow small businesses with gross receipts less than $10 million to use the cash method of accounting
- Provides small businesses with a tax credit for contributions to new retirement plans. For defined contribution plans, the credit would be equal to 50 percent of employer contributions made to an employee’s retirement account, limited to 3 percent of the employee’s compensation. The provision excludes highly compensated employees and is specifically targeted at employees with smaller incomes who need more assistance saving for retirement.
- Permits the self-employed to exclude contributions to a qualified retirement plan when determining employment tax liability
- Allows self-employed workers to deduct their health insurance costs when determining employment tax liability
Fellow Senate Finance Committee member Senator Blanche L. Lincoln (D-AR) joined Senator Smith as a sponsor of the bill. The Senate Finance Committee has jurisdiction over the federal tax code. They will work through the remainder of this session of Congress to pass the BOOST Act and plan to continue advancing the legislation through the next session.
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