In May 2007, Congress approved the Small Business Tax Relief Act of 2007 as part of a larger appropriations bill, P.L. 110-28 . Among the act's provisions were an extension of the increased "expensing" tax-benefit for small businesses and an extension of the work opportunity tax credit (WOTC) incentive for hiring members of certain targeted groups. As 2007 progressed, Congress considered a number of narrow, sector-specific business tax items. In part, these were provisions designed to promote certain types of economic activity—for example, both the House and Senate considered energy tax provisions aimed at conservation and alternative energy sources. Also, Congress considered extension of a set of numerous temporary targeted tax benefits that were scheduled to expire by the end of the year (the "extenders"). Congress also looked to various aspects of business taxation as a way to raise tax revenue that would offset the revenue loss from selected tax cuts it was considering. Revenues were a key concern given the large and continuing federal budget deficits as well as House and Senate procedural rules designed to restrain deficit-increasing tax and spending legislation. For example, Congress demonstrated considerable interest in measures to restrict corporate tax shelters, several measures related to international taxation, and a reexamination of the domestic production deduction enacted in 2004. In the closing months of 2007, Congress began to consider broader revision in corporate taxation. In October, Chairman Charles Rangel of the House Ways and Means Committee introduced H.R. 3970 , an omnibus business tax bill with a variety of both tax cuts and tax increases. In part, the bill was formulated with an eye towards the international economy and the attractiveness of the United States as an investment location—it contains, for example, a cut in the general corporate statutory tax rate and a permanent increase in the small business expensing benefit. However, the bill also echoes the classic tax-reform approach of the landmark Tax Reform Act of 1986, proposing to couple its rate cut with a set of base-broadening measures, including a paring-back of the deferral tax benefit for multinational firms and repeal of the domestic production deduction. In early 2008, Congress focused on stimulating the economy and renewing general farm legislation. In February, Congress enacted the Economic Stimulus Act of 2008, P.L. The act's two business investment provisions provided for a temporary increase of small business expensing and temporary "bonus" depreciation limits. In May, the Food, Conservation, and Energy Act of 2008 ( P.L. 110-234 ) was enacted and modified several alternative fuel production tax credits. Currently, other congressional deliberations regarding business taxation involve energy taxation and the extenders ( H.R. 6049 , S. 3098 , S. 2886 , etc.). The most prominent business tax cuts can be summarized as follows: temporary "bonus" depreciation provisions designed to spur investment spending; capital gains and dividend reductions, intended (in part) to increase capital formation and the flow of savings to the corporate sector; extension of a set of narrowly-applicable temporary tax benefits (the "extenders") that were addressed by several acts; and provisions enacted in 2004 designed to boost U.S. manufacturing and competitiveness (the domestic production deduction and foreign tax credit provisions).
In early 2007, congressional action on business taxes began with a focus on small business, to counter the purported adverse impact of an increase in the federal minimum wage on small business. In May, Congress enacted the Small Business Tax Relief Act of 2007 as part of a larger appropriations bill (P.L. 110-28). Among the act's tax measures were an extension of the "expensing" tax benefit for small business investment and an extension of the work opportunity tax credit incentive for hiring members of targeted groups.
As 2007 progressed, Congress considered a number of narrow, sector-specific business tax items. In part, these were provisions designed to promote certain types of economic activity—for example, both the House and Senate considered energy tax provisions aimed at conservation and alternative energy sources. Also, Congress considered extending a set of numerous temporary targeted tax benefits that were scheduled to expire by the end of the year (the "extenders").
Congress also looked to various aspects of business taxation as a means to raise tax revenue that would offset the revenue loss from selected tax cuts it was considering—a key concern given the large and continuing federal budget deficits and House and Senate procedural rules designed to restrain deficit-increasing tax and spending legislation. For example, Congress showed considerable interest in measures to restrict corporate tax shelters, several measures related to international taxation, and a reexamination of the domestic production deduction enacted in 2004.
In the closing months of 2007, Congress began to consider broader revision in corporate taxation. In October, Chairman Charles Rangel of the House Ways and Means Committee introduced H.R. 3970, a business tax bill with a variety of both tax cuts and tax increases. The bill was partly formulated with an eye towards the international economy and the attractiveness of the United States as an investment location. The bill also echoes the classic tax-reform approach of the Tax Reform Act of 1986, proposing to couple its rate cut with a set of base-broadening measures.
In early 2008, Congress focused on stimulating the economy and renewing general farm legislation. In February, Congress enacted the Economic Stimulus Act of 2008. The act's two business investment provisions provided for a temporary increase of small business expensing and temporary "bonus" depreciation limits. In May, the Food, Conservation, and Energy Act of 2008 (P.L. 110-234) was enacted and modified several alternative fuel production tax credits.
Currently, other congressional deliberations regarding business taxation involve energy taxation and the extenders (H.R. 6049, S. 3098, S. 2886, etc.). This report will be updated in the event of significant legislative activity.