House Panel Examines Importance of Expiring Tax Credits
The House Small Business Committee held a hearing on Sept. 30 to discuss tax breaks set to expire at year’s end and the impact on small business. The breaks include tax provisions for R&D credits, clean energy incentives, the Alternative Minimum Tax exemption amount, accelerated depreciation, and others. In addition, provisions such as the first time homebuyer credit are scheduled to sunset at the end of the year.
“Whether we’re talking about home-office deductions or bonus depreciation for equipment purchases, entrepreneurs rely on tax measures to expand their ventures,” said committee chair Rep. Nydia Velazquez (N.Y.). For small firms facing tightening credit and shrinking capital, incentives can make all the difference. In some instances they’re the deciding factor for things like hiring workers and making investments.”
Keith Hall, representing the National Association for the Self-Employed, testified that allowing the tax incentives to expire that have clearly made a difference “seems t be the wrong signal at the wrong time.”
But the committee’s ranking Republican, Rep. Sam Graves of Missouri, argued that temporary tax provisions make it more difficult for companies to operate because they can’t budget or plan for the long term.
“Because small companies are constantly squeezed by ever growing costs, tax relief is essential. I would prefer that Congress pass permanent tax rate reductions rather than narrower, temporary provisions that must be renewed by Congress year after year,” said Graves. He added that if the former President George W. Bush’s 2001 and 2003 tax cuts, set to expire in 2010, are not made permanent, “working families will see their taxes increase, and their prospects for employment decline.”