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Small Business Committee Newsletter Printer Friendly Version
Small Business Committee Notes
Friday, February 10, 2006 Printer Friendly Version
Small Business Committee Notes February 10, 2006 -- Issue 109-34 Phil Eskeland, Policy Director, House Committee on Small Business _______________________________ President Releases Fiscal Year 2007 Budget Request On Monday, February 6, the Bush Administration released its annual budget request. Overall, the budget proposes to spend $2.77 trillion on the various mandatory and discretionary programs of the federal government. Included in this budget is several tax relief and reform proposals of direct interest to many small business including: 1) Making permanent the tax cuts previously passed by Congress, including estate or “death” tax repeal, in which the average tax savings in 2005 was $3,235 per small business; 2) Making contributions to Health Savings Accounts (HSAs) tax deductible and increasing the amount that can be set aside for HSAs; 3) Enacting an even higher and permanent small business (Section 179) expensing limit by increasing the deduction for qualifying property from $100,000 to $200,000 and increasing the phase-out of the deduction from $400,000 to $800,000 and indexing both levels for inflation thereafter; 4) Making permanent the research and experimentation tax credit; 5) Combining and making permanent the Work Opportunity and Welfare to Work Tax Credit; and 6) Extending for one-year individual Alternative Minimum Tax (AMT) relief. In addition, the President’s budget contained $624.2 million for the programs run by the Small Business Administration (SBA). Essentially, this represents a flat-lined request from last year’s level (not counting various disaster supplemental spending bills and Congressional initiatives or earmarks). Below is a copy of the SBA press release on this topic: The U.S. Small Business Administration today announced a fiscal year 2007 budget request of $624 million that provides a record $28 billion in loan and venture capital authority for the agency’s flagship small business financing programs. On the technical assistance side, the budget requests approximately $87 million for Small Business Development Centers, $12 million for Women’s Business Centers and $5 million for SCORE, Counselors to America’s Small Businesses. “The SBA’s fiscally responsible FY 2007 request provides for record authority for small business lending and provides for the other key resources we offer to small businesses,” said SBA Administrator Hector V. Barreto. “From a lending perspective, this builds on our successes over the last four years, when we reached more small businesses, including more women and minority entrepreneurs. As we have in the past, we also continue to strive to be efficient and innovative in our use of technology as we deliver financing, technical assistance, education and counseling and contracting programs to millions of small business owners.” As in FY 2005 and FY 2006, the 7(a) loan guarantee program will be sustained by modest fees paid by lenders and borrowers and will not be subsidized by an appropriation. This has resulted in an annual savings to the taxpayer of about $100 million. The program has operated on that basis since the start of FY 2005, and set all-time loan volume and dollar records last year. The budget proposes a fee on loans greater than $1 million made to small businesses to offset loan-making administrative costs. The fee will have no effect on the vast majority of borrowers. It also proposes to continue providing preferential loan terms to victims of disaster. However, in order to contain the escalating costs of the program, it proposes keeping the current deeply subsidized rates for the first five years after origination, during the critical rebuilding phase. Afterward, rates would graduate to the rates on Treasury instruments of similar maturity. The proposal is expected to save $41 million in FY 2007. “These changes are necessary fiscal restraints that strike a balance between the needs of the SBA’s customers and clients with the needs of all American taxpayers,” said Barreto. “They will allow us to continue to operate more efficiently and effectively to meet the record demands of small businesses for financing, and of disaster victims for federal help over the long-term.” Highlights of the proposed FY 2007 SBA budget include: • A record $17.5 billion in lending authority for the 7(a) loan guarantee program; • A record $7.5 billion in lending authority for the 504 Certified Development Company program with a zero subsidy; • $3 billion program level for the SBIC debenture program with a zero subsidy (same as current year); • $900 million in lending authority for the Disaster Loan Program (five-year average); • $743 thousand for the National Women’s Business Council (up from $741 million this year); • $743 thousand for Veteran’s Outreach (up from $741 million this year); • $990 thousand for the Drug Free Workplace Program (up from $987 million this year). “We look forward to working with our oversight committees in Congress as the budget process moves forward to make sure the SBA continues to be America’s small business resource,” added Administrator Barreto. Later next week, the Committee will offer its formal comments on the President’s FY ’07 budget request in its letter to the House Budget Committee. For further information, please contact Phil Eskeland, Policy Director, or Brad Knox, Chief Counsel. _______________________________ Internet Sales Tax? On Wednesday, February 8, the Regulatory Reform & Oversight Subcommittee, chaired by Representative Todd Akin of Missouri, held a hearing focusing on the small business implications of trying to collect and distribute state and local sales taxes from those firms that use the Internet to conduct business. Below is a copy of Chairman Akin’s opening statement: “The Internet has emerged as an extremely important channel of commerce in our nation. For this reason, we must be vigilant in keeping this medium as unencumbered from regulations and taxes as possible. I oppose anything that constitutes a new tax or imposes new onerous regulations on our nation’s businesses, especially those selling over the Internet. We are here to investigate recent federal and state efforts to shift responsibility to collect state sales and use taxes to out-of-state Internet vendors. A state currently cannot impose that burden unless a business has a constitutionally significant presence or “substantial nexus” within the state. Because e-commerce has become a vital channel for businesses of all sizes, many states are concerned with the loss of potential tax revenue. Consequently, these states have banded together to form the Streamlined Sales and Use Tax Agreement, which is an effort to harmonize sales and use tax laws and simplify tax collection for vendors. Member states of this agreement argue that by creating a more uniform system of laws in this nation and easing burdens on vendors, they in turn should be given the authority by Congress to collect sales and use taxes from out-of-state Internet vendors. Currently, two nearly identical bills have been introduced in the Senate that would provide such authority to states. Both measures include an exception from remote sales and use tax collection for small businesses. However, the bills differ in how this should be accomplished. Thus far, no companion legislation has been introduced in the House. Our panelists will address the many issues surrounding implementation of the Streamlined Sales and Use Tax Agreement. Particular emphasis will be placed on the scope of the current federal legislation and the many new compliance burdens that could be placed on our nation’s businesses if this legislation is enacted.” For further information, please contact Chris Szymanski, Professional Staff. _______________________________ Inc. Magazine Names Chairman Manzullo “Best Friend in DC” to America’s Entrepreneurs In its Feb. 1, 2006 edition, Inc. Magazine named House Small Business Committee Chairman Don Manzullo (R-IL) one of the “Best Friends in D.C.” for America’s small business owners. In an article highlighting the top 19 small business advocates in our nation’s capital, Chairman Manzullo was the only U.S. House member listed as a “Best Friend.” He joined three U.S. Senators - Senators Chuck Hagel, Olympia Snowe, and John Kerry - as the four Members of Congress receiving the award. The remaining “Best Friends” came from the Bush Administration, trade associations, think tanks, and journals. “I am honored to be considered a ‘Best Friend’ of the 25 million small employers in America,” Chairman Manzullo said. “These are the people who get up every morning, send their kids off to school, put in a hard day’s work, and support their communities. They are the backbone of our economy, and they employ the majority of workers in our country. “It’s wonderful to be recognized by Inc. Magazine in this manner. But we still have lots of work left to do. As long as I am a member of Congress, I will always work hard to protect the interests of our entrepreneurs so they can experience the American dream and continue providing jobs and opportunities for our citizens.” The entire article can be read on Inc. Magazine’s website at <http://www.inc.com/magazine/20060201/dc-intro.html> _______________________________ Upcoming Events No formal committee activity is planned for next week. Week of February 19th is the President’s Day District Work Period. The House will not be in session. _________________________________ Past hearings/mark-ups/roundtables/meetings in 2006 February 1, 2006 - Tax, Finance & Exports (TF&E) and Rural Enterprises, Agriculture & Technology (REA&T) joint subcommittee hearing on “Transforming the Tax Code: An Examination of the President’s Tax Reform Panel Recommendations.” February 8, 2006 - Regulatory Reform & Oversight (RR&O) Subcommittee hearing on “The Internet Sales Tax: Headaches Ahead for Small Business?” _____________________________ Small Business Website Check out the Small Business Committee website at http://www.house.gov/smbiz. The site includes regular updates on small business committee news. The site features special projects, press releases, hearings and scheduling information. _______________________________ Phil Eskeland Deputy Chief of Staff & Policy Director House Committee on Small Business Phil.Eskeland@mail.house.gov (202) 225-5821 To contact any staff member listed in the above newsletter, please use the general number for the House Small Business Committee - (202) 225-5821. Please E-mail me if you want to be removed from the mailing list or if you know of others who might be interested in receiving this publication. Mission Statement of the House Committee on Small Business "We promote the success of America’s small businesses by leveling the global economic playing field and reducing domestic burdens that impede their growth. In this spirit, we work to ensure that every branch of the U.S. government understands the critical role America’s small businesses play - both at home and abroad - including the jobs they create and the spirit of entrepreneurship they embody.”
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