Senate Democratic leaders signaled Monday that they soon will introduce a bill that would provide tax relief for small businesses that hired new workers and purchased new capital equipment this year.
Tax breaks for small business are proving to be a popular election year issue.
Last week, House Majority Leader Eric Cantor, R-Va., introduced
a measure that would provide a 20% across-the-board income tax cut for any company with fewer than 500 employees — regardless of how it is comprised. Mr. Cantor's bill, for instance, could apply to the so-called subchapter S corporations under which many investment advisory firms are organized.
The Senate Democratic bill would provide a 10% income tax credit for small businesses that hired new employees or increased wages in 2012. The maximum increase in eligible wages would be $5 million, capping the credit at $500,000.
The Senate bill also would extend the so-called bonus depreciation for small businesses, allowing them to write off 100% of the cost of major capital purchases in 2012.
“These are solutions that have proven successful in creating jobs,” Senate Majority Leader Harry Reid, D-Nev., said in a conference call with reporters Monday. A Senate leadership aide said the bill will be brought to the Senate floor “in the coming weeks.”
Sen. Charles Schumer, D-N.Y., chairman of the Senate Democratic Policy Committee, said that the Senate bill is superior to the House version because it is focused on small businesses, such as a bakery that buys a new oven and hires three new workers.
Mr. Schumer characterized the House measure as “just giving tax breaks to millionaires and billionaires who don't need it,” implying that Mr. Cantor's bill could benefit partnerships such as law or investment firms that don't intend to do any hiring this year.
“Our tax cut is targeted to help small business,” Mr. Reid said. He added that Republican efforts are “camouflaged to help the wealthiest Americans.”
When he introduced his bill last week, Mr. Cantor described it as a “common-sense measure” that will “put more revenues, more money into the hands of small-business owners so that they can invest those funds to retain and create more jobs and to grow their businesses.”
On Monday, an aide to Mr. Cantor welcomed the Senate Democrats' proposal.
“We're glad to see Sens. Reid and Schumer agreeing that we need to focus on cutting taxes and red tape on small businesses so that our nation's job creators can grow and hire again,” Laena Fallon, a spokeswoman for Mr. Cantor, wrote in an e-mail. “The expensing provision that Sens. Reid and Schumer highlighted today is certainly an area of common ground to help small businesses and was included in our payroll bill in December.
