Today, Congressman Rubén Hinojosa voted to spur economic growth and create 500,000 new jobs by encouraging the development of American small businesses. The Small Business Jobs Act, H.R. 5297, increases much-needed lending to millions of small businesses, and offers 8 new tax incentives to companies, so that they may expand, hire, and fuel our economy. It also keeps jobs in America by closing tax loopholes that reward corporations that ship jobs overseas.
"This bill provides vital access to capital and tax relief to America's small businesses to encourage them to invest and hire new workers," said Rep. Hinojosa. "Small businesses are the foundation of our economy and are an integral part of creating jobs and rebuilding the economy for the future. We owe it to them to ensure that they have a business environment in this country that helps them grow and flourish. Increased access to capital and new tax cuts will not only keep jobs in America, and in our communities, it will allow small businesses to thrive across this nation."
The Small Business Jobs Act will help America's 27 million small businesses create new jobs and grow with $12 billion in tax cuts. It will make Main Street businesses more competitive with big corporations by leveraging up to $300 billion in private sector lending for small businesses, along with state grants for small business lending. With tax cuts and access to more capital, our nation's small businesses will be able to put more Americans back to work. The Small Business Jobs Act takes another step to end job outsourcing by ending tax incentives for companies that ship jobs overseas. Finally, this bill is fully paid for over a ten year period and will not add a dime to the deficit.
"We must continue to overcome opposition, avoid any delays and move forward", said Rep. Hinojosa. "We have passed a bill that moves America in the right direction. We are fighting for Main Street and job creation in South Texas and all across this great country".
For more details on the provisions in the Small Jobs Act that will spur economic growth, please see below:
The bill creates a $30 billion Small Business Lending Fund to provide community banks with capital to increase small business lending. The fund is limited to the smallest banks, those holding $10 billion or less in assets, with key performance-based standards to provide incentive to those lenders that extend new credit to small businesses by decreasing the dividend rate banks pay as they increase small business lending.
It also invests $1.5 billion in grants to support $15 billion in new small business lending through already successful state programs.
The bill expands access to and lowers costs for small business to access Small Business Administration loans and increases SBA loan limits.
The bill also continues the small business lending program that eliminates fees charged for SBA loans [7(a) and 504 loans] and increases the government guarantees on 7(a) loans from 75 percent to 90 percent through the end of the year. Since its creation, this has supported over $26 billion in small business lending, which has helped to create or retain over 650,000 jobs. The bill raises the cap on small business loans to increase lending by $5 billion in the first year, increasing the 7(a) and 504 loan limits from $2 million to $5 million, 504 loan limits for manufacturing firms are increased to $5.5 million, Microloan limits are increased from $35,000 to $50,000 and SBA Express working capital loans are increased from $250,000 to $1 million. In addition, the bill spurs investors by giving a 100 percent exclusion from capital gains taxes on small business investments.
The bill also reduces small business taxes by allowing them to carry back general business tax credits to offset their taxes from the previous five years.
Small businesses will also be able to count the general business credits against the alternative minimum tax, freeing up capital for expansion and job growth.
The bill doubles small business expensing to $500,000, phasing out at $2 million, for immediate write offs of capital investments, such as equipment and machinery, in 2010 and 2011. It also expands purchases qualifying for expensing to include certain types of real property, such as leasehold, retail and restaurant improvements.
In addition, the bill extends bonus depreciation, allowing businesses to immediately write off 50 percent of the cost of new equipment investments in 2010 to spur investment and growth.
The bill doubles to $10,000 the tax deduction for start-up expenditures for entrepreneurs looking to launch a new venture. It creates a variety of new tools to help small businesses gain international market access and export goods (at the U.S. Trade Representative, SBA, and Commerce), including a new State Export Promotion Grant Program (STEP), which will leverage more than $1 billion in exports.
The bill also improves tax fairness by preventing small businesses from incurring large tax penalties under Section 6707A aimed at large corporations and wealthy individuals investing in tax shelters.
The bill removes onerous requirements that complicate the ability to deduct costs of cell phone use as a regular business expense. It also allows self-employed individuals to deduct health insurance costs in paying the self-employment tax in 2010.
In addition, the bill aims to remove the red tape and close loopholes that often put government contracts into the hands of multinational corporations, instead of Main Street businesses. It provides for periodic reviews of small business size standards in government contracts and requiring prompt payments to small business subcontractors from large businesses with government contracts.
The bill also ensures that no business contracting program -- HUBZone, 8(a), and Service-Disabled Veterans and Women Owned Businesses -- takes priority over another in competing for federal contracts.
The bill is fully paid for by closing tax loopholes and the tax gap. It takes another in a series of steps to close tax loopholes that promote corporations shipping jobs overseas, dealing with the source rules on guarantee fees for indebtedness.
The bill also closes a loophole that allows paper mills to claim biofuel tax credit for a byproduct known as "crude tall oil," a waste by-product of paper manufacturing. The bill would limit the tax credit to fuels that are not highly corrosive (i.e., fuels that could be used in a car engine or in a home heating application).
The bill also allows 401(k), 403(b), and governmental 457(b) plans to permit participants to roll their pre-tax account balances into a Roth account. Contributions to Roth accounts are taxed when made, but distributions of both principal and earnings are tax-free upon withdrawal.
In addition, the bill reduces the tax gap by requiring information reporting for rental property expense payments, increasing penalties for failure to file information returns, and tightening the process for going after federal contractors who have not paid their federal taxes.