Late Friday evening, House and Senate tax writers announced they had come to an agreement on the Small Business Tax Package to accompany an increase in the minimum wage. While this package is destined to join the current Iraq Supplemental and get vetoed by the President, the expectation is that the package will then be included in the subsequent supplement spending bill that should get signed into law. As BNA reports:
The package, the culmination of several weeks of impasse in reconciling vastly different House and Senate packages followed by a short spurt of negotiations, will be included in the supplemental spending bill (H.R. 1591) conference report. Conferees are slated to meet the evening of April 23 and the conference report is expected to be on the House and Senate floors later that week. The conference report is expected to be vetoed by the president, though a modified supplemental will follow quickly.
The package itself was whittled down from the Senate-passed $12 billion version to just under $5 billion over ten years. This small package is not popular in some circles. Senator Grassley, ranking member of the Finance Committee, issued a statement Friday evening criticizing the size of the agreement and the failure of the agreement to include several revenue offsets he championed. According to the Grassley statement:
“ The point of this package was to give tax relief to small businesses to counteract the effects of the minimum wage increase and otherwise boost the economy. The relief was supposed to be contemporaneous with the wage increase so small businesses wouldn’t cut jobs. The Senate package was barely adequate. I called it peanuts. The House package was puny. I called it a peanut shell. Now we have a single shriveled peanut. This package is stripped of a lot of meaningful tax relief.”
Meanwhile, a number of the S corporation provisions did survive the negotiations, including the passive investment provision and provisions affecting banks and qualified subchapter S subsidiaries. The negotiators chose to exclude the nonresident alien provision and did not harmonize the effective dates of these provisions to begin this year. So while we support any and all improvements to the S corporation rules, we’ll continue to push for those priorities until the ink on the signed bill is dry.
Here’s a summary of the agreement reached on Friday.