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SEN RUSSELL WAS AN OPTIMIST

Posted by Admin Posted on Feb 01 2011

The name of this blog comes from a comment by Sen Russell Long (D-LA) when he was Chairman of the Senate Finance Committee.  He summarized tax reform as: "Don't  tax me.  Don't tax thee.  Tax that fella behind the tree!"

We are now getting our first look at tax reform in the current Congress, and it isn't pretty.

The 2009 stimulus bill included a provision temporarily eliminating capital gains taxes on the sale of certain small businesses. The Small Business and Jobs Act passed last September extended that break another year. On Monday, President Obama announced he wants to make that provision permanent. House Speaker John Boehner (R-OH) immediately said it wasn't enough, demanding more tax incentives for small businesses, protection from regulation and, of course, repeal of health care reform. One GOP proposal would cut taxes on small businesses by 20%. Neither side has given any indication of how they will pay for the lost revenue, and the Tea Party has not commented.

Despite brave rhetoric about taming the deficit, it seems Democrats and Republicans have decided to get into a bidding war for jobs growth without considering the costs.

It also helps to remember that everything hinges on the definition of a small business. Current law defines a qualifying small business to exclude, among other things, S Corporations and corporations with more than $50,000,000 of assets. As most privately owned companies are S Corporations, it isn't clear just who benefits from the provision, or how effective it is at generating jobs.

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