WASHINGTON, D.C. – U.S. Senators Pat Toomey (R-Pa.) and Bob Menendez (D-N.J.) are working together to help make it easier for entrepreneurs to start and grow a small business and to help those businesses comply with complicated tax rules.
The Senators today introduced the bipartisan Start Up Jobs and Innovation Act which will, among other things:
• Make it easier for businesses to expand by permanently allowing companies to deduct the first $500,000 in equipment purchases. Without this provision, businesses would only be allowed to deduct a small portion of their costs in the first year, with the remaining amount deducted over a period of many years making it more expensive and difficult for a company to grow.
• Permanently cut taxes for people who make long-term investments in American small businesses. This will let U.S. small businesses attract the investment they need to create jobs and compete in today’s global economy.
• Remove a tax barrier that makes it harder to create a business by doubling the amount of start-up costs entrepreneurs can deduct in the first year. Currently, companies can only deduct the first $5,000 in start-up costs, and amounts above that have to be deducted over the course of 15 years.
• Allow high-tech small businesses the ability to use the same tax provisions large firms have available for innovation. Under the bill, investors in research-intensive small companies would be able to deduct losses and receive credits — which are currently available to the business but don’t actually benefit them.
• Ease tax compliance for small businesses by allowing more companies to use the simpler “cash accounting” method. This will make it easier for small companies to pay their taxes, giving them more time to focus on creating jobs and growing their business.
“I started a chain of restaurants in Allentown in 1990 with two of my brothers,” said Sen. Toomey. “We used our own savings to fund the start-up costs and worked day and night and eventually created hundreds of jobs in the Allentown and Lancaster region. So I understand the unique struggles, uncertainties, and risks involved in starting one’s own business. We can make it easier to be innovative. I am pleased to join with Sen. Menendez to propose a bill will do just that by freeing up the money and time small businesses have available to re-invest and hire more workers.”
“I’m here with Senator Toomey to introduce this bill because I believe that investing in our small businesses is the smart thing to do for our communities and our economy,” said Sen. Menendez. “Yet too often, our tax rules aren’t written with the understanding of the small business owner in mind. That’s why our bill will make it easier for small businesses to do their taxes, free up capital for investment and job creation, and allow small businesses to use the same tax preferences large firms have available for innovation.”
“Senators Toomey and Menendez’s legislation makes several important changes to the tax code that our members in Pennsylvania enthusiastically support,” said Kevin Shivers, executive state director for the Pennsylvania chapter of the National Federation of Independent Business (NFIB). “For most small businesses, the most important source financing is cash flow, which is closely tied to a small company’s overall tax burden.
“Section 179 business expensing provides small businesses an immediate source of capital recovery and improves cash flow,” Shivers continued. “The Toomey-Menendez legislation provides a permanent level of business expensing that also is indexed to inflation and includes real property. Additionally, small companies would benefit from an expanded ability to use cash accounting for tax purposes and expanded deductions for start-up costs. These types of small business tax incentives will help simplify the tax code and help small businesses to grow and thrive.”
The following organizations have endorsed the bill:
Pennsylvania Manufacturers Association
National Association of Manufacturers
Pennsylvania chapter of the National Federation of Independent Businesses
National Federation of Independent Businesses
Coalition of Small Business Innovators
Biotechnology Industry Organization of New Jersey
Biotechnology Industry Organization of Pennsylvania.
~ News Release via Pat Toomey, U.S. Senator for Pennsylvania ~