February 16, 2007

WASHINGTON, D.C. - Today Congresswoman Kirsten Gillibrand voted to pass the Small Business Tax Relief Act of 2007 (HR 976). Congresswoman Gillibrand was an original co-sponsor of the legislation. The bill, which passed with broad bipartisan support, is a revenue-neutral tax cutting package that would extend critical tax provisions for small business owners and pave the way for the House and Senate to agree on legislation to raise the Federal minimum wage from $5.15 per hour to $7.25 per hour.

"Our small businesses in Upstate New York pay too much in taxes," said Rep. Gillibrand, a member of the influential House Armed Services Committee. "Successful small businesses are the life blood of any strong local economy and finding ways to help them be successful is a top priority from me in Congress. The growth of small businesses is essential because small businesses generate two thirds of all new jobs in America."

Gillibrand also supports fixing the Alternative Minimum Tax (AMT) to provide tax relief for middle class families in Upstate New York.

This legislation is likely to be coupled with an earlier proposal that passed in the House to raise the federal minimum wage. The two bills are expected to be combined in a conference committee with the Senate. Gillibrand added, "As a cosponsor for both small business tax cuts and raising the Federal minimum wage, I look forward to getting a compromise bill that includes both to the President’s desk for a signature."

The Small Business Tax Relief Act of 2007 was endorsed by the Chamber of Congress, the American Farm Bureau Federation, the National Association of Manufacturers, the Work Opportunity Tax Credit Coalition, and the National Federation of Independent Businesses.

Specific provisions of H.R. 976 include:

1. Extend and expand the Work Opportunity Tax Credit (WOTC). The WOTC gives employers tax credits for hiring targeted groups, including Iraq War veterans.

2. Extend and increase the Small Business Expensing Provision, which will allow small businesses to more easily afford large capital expenses, such as store updates, equipment upgrades and technology purchases. For Farmers, qualified property includes farm machinery, milk tanks, automatic feeders, and single purpose agricultural structures and livestock.

3. Enhance the Tip Credit for employers in the Food and Beverage Industry. Employers will continue to receive a tax credit for the Social Security and Medicare taxes they must pay on their employees’ tips.

4. Provide a permanent waiver of the AMT limitations that prevent many small businesses from claiming the WOTC and the Tip Credit. Current law limits small businesses ability to claim the tax credits because they cannot be used to offset taxes that would be imposed under the AMT.

5. Create the Family Business Tax Simplification provision, which will allow a married couple that jointly owns an unincorporated business to file as a sole proprietorship without penalty and ensure that both spouses receive credit for paying Social Security and Medicare taxes. This will help many of the family-owned businesses in the district.

6. Deny the lowest capital gains and dividend rate to dependent children of wealthy taxpayers. Currently, taxpayers can avoid income taxes by placing assets in their child’s name.

7. Allows farmers to deduct expenses immediately instead of having to depreciate them over time which improves cash flow and allows farm businesses to better match income and expenses.

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