FOR IMMEDIATE RELEASE
Passage of 'Jobs' Tax Bill Greatly Benefits America's Small Business
Washington, D.C. (Oct. 8, 2004) - Independent Community Bankers of America (ICBA), the nation's largest banking trade association, sees the enactment of the latest federal "Jobs" tax bill as a tremendous economic benefit to millions of America's job-creating small businesses. "The small business tax provisions will bolster small businesses by significantly reducing and simplifying the size and scope of their tax burden in the years ahead," stated Camden R. Fine, ICBA's president and CEO. "ICBA has encouraged Congress to pass these measures for many months. We are proud to be part of this important victory for small business."
Specifically ICBA praised the inclusion of hard-fought Subchapter S reforms first promoted by ICBA in its comprehensive tax policy study "Community Bank Tax Relief and Simplification Options." (View the full study.)
The passage of these important Subchapter S corporation reforms will help more than three million Subchapter S businesses nationwide. A Subchapter S business can prevent punitive double taxation by paying federal tax on its income only once at the individual shareholder level. "Many onerous rules and restrictions that prevented small businesses and community banks from benefiting from Subchapter S status have now been liberalized," stated Paul Merski, ICBA's director of federal tax policy. "This alone is great news for some 2,300 existing S corporation banks and the 1,400 additional community banks considering electing S corporation status."
Key Subchapter S reforms in H.R. 4520 pending for a final passage in Congress with bipartisan support include:
- Increasing the number of Subchapter S corporation eligible shareholders to 100 from 75;
- Counting family members as only one shareholder;
- Permitting S corporation shares to be held in Individual Retirement Accounts; and
- Easing restrictive passive income and ESOP rules.
ICBA applauds Congress for supporting a bill that provides additional small business tax relief including:
- Allowing S-corporations, partnerships and sole proprietorships to benefit from a 9 percent deduction on income attributable to domestic manufacturing production activities;
- Extending the higher $100,000 immediate expensing threshold for small business under Section 179;
- Preserving beneficial depreciation rules; and
- Improving the new markets tax credit.
"Undoubtedly, these beneficial tax reforms will allow our nation's small businesses to do what they do best-create jobs and support our communities," Fine stated.