Senate Finance Chairman Max Baucus (D-Mont.) wants to move a small business tax package before the August recess. The legislation exempts capital gains taxes on certain C corporation stock, extends “bonus depreciation” allowing companies to expense 50 percent of the cost of equipment, and allows self-employed workers to deduct health insurance costs from their self-employment tax.
The bill also enables small businesses to get a refund on past tax payments and count general business credits against the alternative minimum tax. The proposal includes measures that passed the House as well, such as penalty relief for businesses that invested in certain tax shelters.
Once debate begins again on the bill, Senate Minority Whip Jon Kyl (R-Ariz.) has indicated that he would like to amend the measure with a fix for the estate tax.
The tax on estates is repealed, but barring congressional action it returns next year to pre-2001 levels by socking estates worth more than $1 million with a tax that tops out at 55 percent. Republicans and more than a few Democrats oppose this level and prefer rates set in 2009, when estates worth over $3.5 million were taxed at a top rate of 45 percent.
In December, the House passed legislation (H.R. 4154) making permanent 2009 estate tax rules, which costs a whopping $233.6 billion over 10 years. The Senate has yet to take up the measure.
Tax lobbyists expect a lot of tax activity in the coming weeks, but aren’t sure how much of it will produce legislation aimed for the White House. They expect the lame duck session will be when most bills pass Congress, but aren’t sure if the Bush middle-class tax cuts will be a part of the group.
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