As Congress and the Administration continue to discuss policies to spur job creation and economic growth, Congressman Erik Paulsen (MN-03) sent a letter to President Obama today asking him to consider two specific proposals aimed at strengthening small business.
The first is a bill introduced by Paulsen, H.R. 2284, that would give small businesses the ability to defer taxes on any business income they reinvest in their partnership or S corporation. The second proposal, one Paulsen is currently crafting with colleagues in both the House and Senate, would examine ways to reclassify small business income in order to encourage growth.
"There is bipartisan agreement in Washington that we must focus on job growth first and foremost in the weeks ahead," Paulsen said. "Small businesses are the engine of job growth in this country, and I'm hopeful the President will consider these common-sense proposals to help rev that engine once again."
The text of the letter is below and copy is also attached.
Dear Mr. President:
Thank you for taking the time to meet with the House Republican Conference last week. I am pleased to see you are willing to reach across the aisle and I stand ready to work with you on our mutual goal of creating jobs and jump-starting the economy.
Small business is the engine of economic growth in our country. If we are going to put Americans back to work, I firmly believe small business will lead the way. In order to foster an environment where small businesses have maximum opportunity to grow, I would like you to consider two proposals that would provide real economic stimulus and encourage job creation.
The first is legislation I introduced in May that provides incentives for reinvestment and hiring by small businesses, principles you have expressed support for recently. My bill, H.R. 2284, would give small businesses the ability to defer taxes on business income - up to $250,000 per individual or $500,000 per couple - if they reinvest the income back into the business through actions such as hiring employees or purchasing equipment. This ensures that small business owners are taxed only on the profits taken out of their business, and also allows for the deferment of taxes on income that was placed back into developing their business. By encouraging reinvestment and incentivizing job creation, we can reach our shared goal of economic growth.
As you know, many small businesses pay taxes under individual rates, rather than corporate tax rates. To address this, I am also working with colleagues in both the House and Senate on legislation to reclassify certain types of business income in order to encourage growth. Our proposal will include an alternative rate schedule for income stemming from small business activity, including sole proprietor, partnership, and S Corporation income. This would ensure that marginal tax rates would not rise for America's job creators during a weak economy.
The goal of these proposals is simple: create jobs and strengthen Main Streets across America by allowing small businesses to keep and reinvest more of their earnings.
During your State of the Union address, you expressed confidence that the small business community had weathered the worst of the recession and, with some assistance, is poised to grow. The first step in that assistance, I believe, is enacting policy that will encourage job creation, reinvestment and economic growth.
As you seek to work across party lines, I look forward to hearing from you on these specific proposals and hope to work with you to advance these important policy efforts.
Member of Congress