Small businesses pushing tax package

The Associated Press

WASHINGTON -- Small-business advocates and their Capitol Hill allies lined up Thursday behind Republican legislation that would cut taxes by $30 billion over five years and include larger deductions for health insurance and business meals.

Rep. Jim Talent, R-Mo., chairman of the House Small Business Committee, said supporters will seek to include the package in the larger 10-year, $778 billion tax cut Republicans intend to put together this summer. "This is one-fifth of the tax cut in the budget," Talent told reporters. "We don't think that's asking too much." The measure would make health insurance costs fully deductible for the self-employed next year, instead of 2003 as envisioned currently. It would also increase the meal tax deduction from 50 percent to 80 percent by 2008, but only for smaller businesses. The most costly item, at $15 billion over five years, would lower from 39.4 percent to 34 percent the top individual income tax rate for partnerships, including closely held ones known as S corporations, and certain other small businesses. The bill also would eliminate a surtax included in employee payroll taxes in 1976 to help the government pay back loans for its unemployment accounts. Even though the loans were repaid in 1987, the surtax remains in place. Small businesses, an important constituency for the GOP, employ six out of 10 American workers, according to the U.S. Chamber of Commerce. An estimated 16 million businesses employ 20 workers or fewer. "We need to do everything we can to help small businesses get started and prosper, and get the federal government out of their way," said Rep. Jim DeMint, R-S.C. Two other priorities for small business, reducing capital gains taxes and abolishing inheritance taxes, weren't included in the bill but have other champions in Congress who are pushing their cause. The House Ways and Means Committee tentatively is scheduled to hold hearings on tax-relief proposals the third week of June, an aide said Thursday, with legislation expected to begin moving in mid- July. Republicans expect President Clinton would veto a massive tax cut, but they believe compromise is possible later this year on a smaller measure that could include some of the small-business provisions. White House aides say Clinton could support modest cuts that mainly benefit the middle class.

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