As small businesses collectively hold their breath this summer over the inane Congressional proposal to tax some – but not all – s corporations differently, Sen. Olympia Snowe (R-ME) is offering some hope. Together with Mike Enzi (R-WY), she is filing an amendment to strike the provision from the bill altogether.
Calling the tax a “poison pill” (pretty close to my own characterization as “death to s corporations”), Snowe openly opposes the provision on her web site.
Enzi similarly blasted the bill, saying:
Congress should not be taking from David to pay Goliath. The original bill would have raised taxes on Wall Street, but when Wall Street howled, lawmakers went looking someplace else – small businesses. They aren’t as able to defend themselves when the tax man cometh. This isn’t a loophole. The IRS already has the tools its needs to ensure proper compliance with self-employment taxes. This is a solution in search of a problem.
The Dems need 60 votes to pass the bill (procedurally, it requires more than a simple majority). Currently, the Dems have 59 seats. Sen. Snowe is viewed as a moderate who often sides with the Democrats on key votes. This isn’t going to be one of the those votes if the s corporation provision remains in the bill.
The controversial measure would impose payroll taxes on all earnings by certain s corporations, including retained earnings not actually distributed. “Certain” corporations means small s corporations which provide personal services and “the principal asset of such business is the reputation and skill of 3 or fewer employees.” In other words, small service corporations. So large law firms, big accounting firms, mammoth physician practices, enormous consulting companies… those folks aren’t affected. But small businesses – those that actually drive more of the nation’s economy – would take a hit. That should help us climb out of the recession, right?
Kudos to Sens. Snowe and Enzi for standing up to the insanity.
If you feel strongly about this bill (one way or the other), I urge you to contact your Senator.
Thank you for keeping an eye on this one. I have sent thank you notes to Sens Snowe and Enzi, and tales of woe and calamity to sens Kerry and Brown (Sens from the Commonwealth of MA) should sec 413 remain in the final bill. It would still have to get thru conference committee because of the changes, but maybe the whole thing should die anyway.
Did you see that what the House passed today did not include the S corporation provisions? See http://bit.ly/bXZka4