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Small Business and Infrastructure Jobs Act

Getting Americans back to work is our number one priority. The President signed the bipartisan HIRE Act into law on March 18th, with tax incentives for businesses to hire out of work Americans - estimated to create up to 300,000 jobs - and to spur small business investments, along with critical investments in highways - over the opposition of all House Republicans.

On March 24th, the House took another step forward, with another in a series of measures to create jobs and strengthen our economy. By a vote of 246-178, the House passed the Small Business and Infrastructure Jobs Tax Act (H.R. 4849), a bill to create jobs--with bipartisan provisions to spur investment in local rebuilding projects and a range of bipartisan proposals to help our small businesses grow, hire and continue to fuel our economy. This $20 billion measure is fully paid for over a decade, and includes:

      • Extension of successful Build America Bonds (BABs)--to make it cheaper for state and local governments to finance the rebuilding of schools, sewers, hospitals and transit projects
      • 100 percent exclusion of small business capital gains to spur investment in small businesses
      • Small business penalty relief endorsed by the Small Business Council
      • An increase in the tax deduction for start-up expenditures to encourage the formation of new small businesses 
      • American jobs provisions that:
          • Help create jobs by extending the TANF Emergency Fund that is already on track to put over 160,000 Americans back to work
          • Save American jobs by cracking down on foreign tax haven corporations that are taking advantage of the U.S. tax treaty network to dodge U.S. taxes and gain an advantage over American companies that play by the rules

        More on the bill:

          Rebuilding Communities & Creating Jobs

          • Build America Bonds. Extends Build America Bonds, which has been called “one of the economic recovery efforts biggest successes,” through 2013. These bonds have been an effective tool in job creation and a vital resource for state and local governments seeking to invest in schools, sewers, hospitals and transit projects - having helped finance more than $78 billion in infrastructure projects through  March 1, 2010 creating jobs and strengthening communities across America. Currently, the federal payments for these bonds expire at the end of the year. Under the bill, these federal payments for the bonds to state and local governments would last through 2013, dropping from 35% to 30% over time. Estimated cost: $7.5 billion over 10 years. State by state information as of February 1, 2010 from the Ways and Means Committee»
          • Recovery Zone Bonds. Extends Recovery Zone bonds for economically distressed areas through 2011 and provides more of them to ensure that all areas nationwide with high unemployment receive a minimum number of these bonds (based on their share of national unemployment). These Recovery bonds, targeted to areas with significant poverty, unemployment or home foreclosures, can be used to invest in infrastructure, job training, education, and economic development. Estimated cost: $2.3 billion over 10 years.
          • TANF Emergency Fund Extension to Help Create Jobs. Helps to create jobs by extending for one year an emergency fund that 35 States are using or planning to use for a jobs program that subsidizes employers, including small businesses, who hire unemployed workers. This Fund is currently on track to put over 160,000 Americans back to work, with more to come if extended, and is supported by the National Governors Association, the National Conference of State Legislatures, and the National Association of Counties. The Fund's extension is needed so States and counties can continue their subsidized jobs programs and can continue to provide assistance to needy families. The TANF Emergency Fund will expire on September 30 with some States planning to discontinue their job programs between April and June without this extension. As Kevin Hassett of the conservative American Enterprise Institute said, 'given the state of the labor market, it is hard to imagine how any sensible person could oppose [extending the emergency fund]. If they are to be more than the party of no, Republicans need to rally around the Democrats who have shown such reserved pragmatism.'
          • Exempt New Markets Tax Credit from AMT.  Exempts the New Markets Tax Credit (NMTC), which leverages federal tax credits to encourage significant investment in low-income communities, from the Alternative Minimum Tax. This will encourage more investors to make investments in low-income communities. Estimated cost: $349 million over 10 years.

          Spur Small Businesses the Engine of our Economy ($3.6 billion over 10 years)

          • Spur Investment in Small Businesses.  Increases the capital gains tax cut for those who invest in small businesses this year, like a proposal in President Obama's budget. The bill would exclude 100% of capital gain income for stock in small business purchased from March 15, 2010 to January 1, 2011. This will spur new investments in small business with new capital they need to grow and hire more workers. Estimated cost: $2.0 billion over 10 years
          • Small Business Penalty Relief. Fixes a tax shelter disclosure penalty (Section 6707A) that has had a disproportionate effect on small businesses. Endorsed by the Small Business Council of America, the bill makes penalties for failing to disclose on their taxes reportable transactions proportionate to the underlying tax savings for small businesses.Some of these businesses were assessed tax penalties as high as $300,000 per year for receiving a tax benefit of as little as $15,000 from the unreported transaction. This bipartisan provision passed the Senateunanimously on February 9, 2010.Estimated cost: $176 million over 10 years
          • Increase in deduction for business start-up expenditures.  Entrepreneurs can deduct up to $20,000 (up from $5,000 in current law) in start-up expenditures in connection with investigating the creation of a business (but not capital or equipment), and more businesses could get the maximum deduction. By allowing entrepreneurs to recover a greater portion of their start-up expenses, the proposal would assist small business owners in overcoming these barriers so they too can focus on hiring new workers and growing their business.  Estimated cost: $508 million over 10 years

          Offsets

          • Cracks down on foreign tax haven corporations that are taking advantage of the U.S. tax treaty network in order to dodge American taxes. Prevents U.S. subsidiaries of foreign-owned companies based in countries without U.S. tax treaties from avoiding U.S. taxes they would otherwise owe by sending the money to an affiliate in a country with a tax treaty. The United States has entered into bilateral tax treaties with many foreign countries -- reducing U.S. tax withholding for foreign persons from the treaty country -- to prevent double taxation of income earned by residents of the treaty countries, and funneling funds through a subsidiary in a tax treaty country can enable the corporation to avoid U.S. taxes. Estimated to raise $7.7 billion over ten years.
          • This proposal is about saving American jobs by leveling the competitive field for American companies that play by the rules.
          • This would affect less than 0.1% of payments made to foreign corporations; the Joint Committee on Taxation says this “would not affect a U.S. corporation that reinvests earnings from U.S. operations back into U.S. activity.”
          • The Bush Administration identified this issue as tax abuse in 2002 (and offered a proposal to close this loophole in their FY 2008 budget) and Republicans have supported similar proposals, including former Ways and Means Committee Chairman Bill Thomas in 2003.
          • No U.S.-based companies would be affected and nearly all foreign multinationals would not be affected because they are organized in countries with which we have an income tax treaty.