Rep. Kind Introduces Legislation Benefiting Small & Family-Owned Businesses In Western Wisconsin
In his continuing effort to find ways to bolster small business growth and investment, U.S. Rep. Ron Kind (D-WI) a member of the powerful tax-writing House Committee on Ways and Means, has co-authored the S Corporation Modernization Act of 2009 (H.R. 2910), which would modify an unreasonable penalty paid by "S corporations." A bipartisan group of members including Rep. Dave Reichert (R-WA), Rep. Allyson Schwartz (D-PA), and Rep. Wally Herger (R-CA) have co-sponsored the bill.
"This bill is a commonsense tax code change that will have huge returns in terms of growth and investment for S corporations," said Rep. Kind. "Especially in this tough economic time, my goal is to look out for the small and family-owned businesses which drive our economy. This bill speaks to that, reducing a penalty on S corporations, and thus encouraging them to reinvest the savings into growing their business and creating jobs."
There are 3.8 million registered S corporations nationwide, 59,000 in Wisconsin alone. S corporations are small and family-owned businesses that have between 1 and 100 shareholders and are taxed differently than large corporations. Right now, S corporations are taxed twice on assets they sell within 10 years of converting to this tax classification - making the sale and reinvestment of these assets prohibitively expensive and hindering growth and job creation. In some states, the double-tax burden can reach as high as 70 percent.
The American Recovery and Reinvestment Act changed the law from requiring S corporations to hold on to unproductive and inefficient assets for 10 years to now requiring their ownership for only seven years, a more realistic business cycle and the same modernized exception Rep. Kind pushed in the 110th Congress. This seven year requirement is only in effect through 2010, at which time S corporations will again be required to hold assets for 10 years, limiting cash flow and availability and encouraging excess borrowing. To provide permanent relief, the S Corporation Modernization Act of 2009 would allow S corporations to liquidate unproductive assets after seven years - freeing up capital to be used to grow the business and create new jobs.
"The seven year requirement enacted through the Recovery Act is helping S corporations successfully manage their business in this economy, proving it a necessary update to current law. In the long run, a three-year reduction in this unreasonable and unproductive penalty will help ease the overall tax burden on small and family-owned businesses and help them grow and prosper in an increasingly competitive market," Rep. Kind added.
"Throughout his tenure, Congressman Kind has been a tireless champion and friend to the small businesses community and his introduction of the S Corporation Modernization Act is another example of how he values Main Street businesses and the workers they employ," said Dick Roderick of the Dead River Company and Chairman of the S Corporation Association.
"Ron Kind has repeatedly proven himself to be a friend of private enterprise in Wisconsin. This legislation will help Appleton Papers and many other Wisconsin-based S corporations confront this difficult economy and emerge even stronger," said Mark Richards, Chairman, President and CEO of Appleton Papers.