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News from Rep. Stephanie Herseth
For Immediate Release
Contact: Russ Levsen, 202-226-4449
Chip Weiskotten, 202-226-8553

HERSETH HELPS PASS TAX RELIEF FOR SOUTH DAKOTA SMALL BUSINESSES

Measure Brings Fairness, Needed Relief to Family Farms and Small Family Businesses

February 16, 2007 – U.S. Rep. Stephanie Herseth today voted for H.R. 976, the Small Business Tax Relief Act of 2007, which passed the U.S. House of Representatives with a broad bipartisan majority. The legislation includes targeted tax relief that will benefit family farms and small family businesses across South Dakota.

Herseth, who also cosponsored the legislation, said, “This is common sense tax relief that will help South Dakota small business owners remain competitive, and help keep our economy strong. The bill extends and expands a range of important tax breaks to ensure small businesses can invest in future growth. Importantly, it contains a key provision that will bring fairness to spouses who jointly own family farms and small family businesses.”

The U.S. Chamber of Commerce supports the bill, stating that H.R. 976 “provides targeted tax relief that will assist small businesses’ job growth.” The bill’s provisions include:

• H.R. 976 would help small businesses invest in new equipment and more easily afford large capital expenses. It would increase the small business expensing limit to $125,000 from its current annual limit of $112,000. In real dollars, it is estimated this will provide small businesses with up to $4,550 of additional cash to make investments in their businesses. H.R. 976 will also extend small business expensing through the end of 2010 and increase the number of eligible companies.

• The bill would extend the Work Opportunity Tax Credit (WOTC), which provides incentives to employers to hire individuals from groups that frequently experience barriers to work, such as disabled veterans. H.R. 976 will help ensure that small businesses can access an expanded WOTC and obtain the full benefit of the FICA tip credit. Under current law, these credits cannot be used to offset alternative minimum tax (AMT). Therefore, these credits do not help the many small businesses that pay AMT. H.R. 976 would allow these credits to be used to offset AMT.

• H.R. 976 will help ensure that restaurants do not experience an unexpected tax increase as a result of an increase in the federal minimum wage by ensuring that restaurants will continue to qualify for the full FICA tip credit.

• Importantly, H.R. 976 would make it easier for husbands and wives who jointly own a business together, such as a family farm, to meet their tax filing requirements. The bill would also change the tax code to allow a husband and wife who own a business that files as a Sole Proprietorship to each receive credit under Social Security, and allow family access to Social Security benefits in case either parent dies or become disabled. This provision will help prevent results that are not only unfair but can be financially devastating under current law.

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Herseth is a member of the Blue Dog Coalition, a group of moderate Democrats committed to fiscal discipline and strong national security, and is co-chair of the Rural Working Group, which is dedicated to raise the profile of issues important to rural America. She also serves on three committees vital to South Dakota's interest: Agriculture, Veterans' Affairs and Natural Resources.