As an ASBA member, you now have free access to news and updates on important issues from our legislative team in Washington DC.

May 2006
by James C. Musser, ASBA Washington Representative

Congress has been busy this month addressing issues of importance to small business. A tax bill was passed, a bill to provide new health care opportunities for small business got bogged down by Senate procedure and the House passed its FY 2007 Budget Resolution. These issues and more make up our latest Washington round-up.

Taxes: The long awaited conference report on extending expiring tax provisions worth more than $75 billion to taxpayers passed both the House and the Senate and President Bush signed it into law. The House passed the extension on a vote of 244 to185 and the Senate passed it on a vote of 54 to 44. The bill extends the small business expensing provision which allows small businesses to immediately write off the first $100,000 in business investments rather than depreciating the expense over several years. This provision is now set to expire in 2010.

The law will also extend the current tax rates on capital gains and dividends which were set to increase if this law was not adopted. The tax law grants a one year extension, through December 2006, on relief from the Alternative Minimum Tax (AMT). The AMT, originally designed to insure that the very rich did not escape taxation through the use of tax shelters and sophisticated accounting, has increasingly been hitting the wallets of middle class taxpayers in high cost of living areas of the country. The law also allows the continued deduction of state and local taxes through 2008.

Health Care: Small business health plan legislation often referred to as Association Health Plans or AHPs, was taken up in the Senate but became bogged down on a procedural motion. Senator Mike Enzi (R-WY), a former small business owner and Chairman of the Committee on Health, Education, Labor and Pensions, had championed S. 1955 which would have allowed small businesses to band together in business and professional associations to purchase health insurance. Similar legislation has passed the House on eight different occasions but has repeatedly run into trouble in the Senate. The Enzi bill actually garnered a majority vote of 55 yeas and 43 nays but it needed 60 votes to proceed. The failure to invoke cloture on the debate so that the bill could move to a final vote means that the legislation is not likely to be revived this year. Enzi has vowed to revisit the issue.

Budget: The House passed its version of the FY 2007 Budget Resolution by a narrow vote of 218 to 210. The Senate had already passed its version of the Budget Resolution as previously reported in this column. The $2.7 trillion budget passed by the House is nearly the same aggregate amount passed by the Senate but with varying priorities. The two chambers must now attempt to work out the differences in a House Senate Conference Committee. Both versions aim to reduce the federal budget deficit and seek to reduce the growth of federal spending.

The House Budget Committee is also holding hearings on a presidential Line-Item Veto with an eye toward crafting legislation that would give the president the ability to veto individual spending measures. The Line-Item Veto is seen by many in Congress as a potential way of cutting much of the pork spending out of the budget.

ASBA will continue to follow and report on these and other issues that might have an impact on small businesses and the people who own them.

James C. Musser, Esq. is a legislative consultant based in Falls Church, Virginia. His reports are updated monthly.