Washington, D.C. – Media headlines bemoan partisan bickering on Capitol Hill. After all, it’s an election year and the political stakes are high — and playing nice on issues and legislation apparently will give one party an advantage over the other on Nov. 7.
A rash of new legislation at the very end of the session, however, belies this conventional wisdom. Bipartisanship is certainly alive and well in terms of the legislative process, particularly with new bills introduced to benefit small business.
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For example, just this week, Sens. Olympia Snowe, R-Maine, and John Kerry, D-Mass., introduced legislation that aims to encourage equity investments in small businesses. Snowe and Kerry are the chair and ranking member, respectively, of the Senate Committee on Small Business and Entrepreneurship.
Under the “Access to Capital for Entrepreneurs (ACE) Act of 2006,” S. 3950, investors would be eligible for a 25 percent tax credit to offset up to $500,000 of investments per year. The legislation limits the investment per small business to $250,000, so an investor would need to invest in two companies to receive the full $500,000 tax credit. (Click here to read more about the Snowe-Kerry bill.)
Similar legislation was introduced earlier this year by Reps. Donald Manzullo, R-Ill., and Earl Pomeroy, D-N.D., in the House.
In early September, Sen. Gordon Smith, R-Ore., introduced the “Bringing Opportunities to Our Small-Business Taxpayers (BOOST) Act,” S. 3857. Sen. Blanche Lincoln, D-Ark., also sponsored the legislation.
BOOST’s tax features are significant, including making the $100,0000 small business expensing deduction permanent (it expires at the end of 2009), and codifying into the law the cash method of accounting for firms with gross receipts of less than $10 million. Regarding the latter, the provision is actually a regulation and small businesses fear the U.S. Treasury could change the rule whenever they so please.
BOOST makes sensible changes for S corporations including how the federal tax code treats the reporting of income from long-term contracts. With respect to retirement plans, it offers small businesses a tax credit for contributions to employee plans while eliminating payroll taxes that small businesses pay on contributions. Finally, on health insurance, BOOST allows the self-employed to deduct health insurance costs in computing the tax on self-employment income. (Click here to read more about BOOST.)
Such spirit of bipartisanship can be found on a range of issues in Washington. However, both parties will vie for the upper hand in convincing voters which party is the best to lead with respect to setting the agenda on issues critical to the economy and entrepreneurship.
Over at the House Small Business Committee this week, Chairman Don Manzullo released a nine-page report detailing how small businesses have thrived under GOP leadership for the past twelve years. The report lists small-business friendly legislative and administrative actions that have been enacted since Republicans took control of the House in 1995.
“House Republicans have enacted an aggressive agenda to give America’s 25.8 million small businesses the tools they need to prosper and create jobs,” Manzullo said. (Click here to view Manzullo’s report.)
The report cites the growth in the number of small businesses in general over the past twelve years, including women and minority-owned businesses; the doubling of small business exporters (from 108,000 to 216,000); relief from taxes and the cost of new regulations; and increases in federal contracts for small firms, as well as Small Business Administration (SBA)-backed loans.
“By reducing taxes, creating more affordable health care options, and eliminating unnecessary regulations, Republicans have made our small businesses more competitive in the global marketplace,” added Manzullo.
For their part, Democrats are focusing on rising health care costs and what they view as inadequacies in government programs that help small businesses secure federal contracts, or cope following national emergencies. On the anniversary of the 9-11 terrorist attacks, Rep. Nydia Velázquez, Ranking Member of the House Small Business Committee, said that the federal government is no better prepared to assist small businesses following such an event.
"It is deeply concerning to know our federal government is no better off than they were five years ago to assist the economic engines of this nation — small businesses — after a terrorist attack," said Velázquez. She noted the struggle that N.Y.C. small businesses continue to face five years after the attack.
Congress leaves town this week and will finish business during a lame duck session after the elections. These sessions have sometimes been fruitful for small business interests as tax initiatives in particular make their way into “must pass” bills or larger omnibus packages.
However, depending upon the outcome of the election, the losers may not be in any mood to collaborate with the victors. This could mean that even popular measures get extinguished along with a bipartisan spirit to help small business.
Click here to visit FOXBusiness.com's Small Business Center.
Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council, a research and advocacy group based in Washington, D.C. that works to protect small business and promote entrepreneurship. She is also founder of Women Entrepreneurs, Inc., an association helping women business owners succeed through education, networking and advocacy. Kerrigan can be reached at kkerrigan@sbecouncil.org.
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