Washington, D.C. (KELO AM) - U.S. Senator John Thune introduced a number of job-creating amendments to the Senate’s legislation to extend expiring tax relief measures, commonly referred to as tax extenders legislation (H.R. 3474). The amendments would make permanent certain tax provisions that expired at the end of 2013, thus encouraging small business investment, promoting American research and innovation, simplifying the tax code for S-corporation shareholders, and preserving the ability of South Dakota taxpayers who itemize to deduct their state and local taxes.
“We need to do everything we can to make it easier and less expensive for small businesses to invest in their companies and create good paying jobs,” said Thune. “For decades, Congress has acted to temporarily extend key parts of the tax code leaving small businesses with uncertainty year after year. My amendments would provide these businesses with permanent tax relief, offering predictability and stability in our tax code. Making these commonly extended tax provisions permanent will help businesses to plan for the future, thus promoting job creation and economic growth.”
1) Permanent Section 179 Small Business Expensing: Thune’s amendment would make it easier for farmers, ranchers, and small business owners in South Dakota and across the country to make new investments. Specifically, his amendment would make permanent the $500,000 expensing limit for small businesses with less than a total of $2 million in qualifying property placed in service per year. Expensing allows small businesses to improve cash flow to reinvest in their companies.
2) Permanent S-Corporation Tax Relief and Simplification: Thune’s second amendment would make the research credit permanent and would also increase the credit rate from 14 to 20 percent. The tax credit, which has been temporarily extended 15 times since 1981, encourages businesses to continue investing in research and development and promotes jobs and manufacturing throughout the country. Thune’s amendment would continue to encourage investment by providing certainty for businesses planning their research and development.
3) Permanent S-Corp Built in Gains and S-Corp Charitable Contributions: More than 103,000 employees or 32 percent of South Dakota’s workforce is employed by a business organized as an S-Corp. Thune’s amendment would allow S-Corp businesses across the country to increase access to their own capital by making permanent the 5-year holding period for assets of a C-Corp converting to an S-Corp. Without a permanent fix, the wait period will revert to 10 years. Thune’s amendment would also help level the playing field between S-Corps and other types of businesses and ensure S-Corp owners are able to fully benefit from the value of their donations to charities.
4) Permanent State and Local Sales Tax Deduction: Thune’s fourth amendment would make permanent the state and local sales tax deduction. This amendment would put South Dakota taxpayers on an equal footing with taxpayers in the large majority of states with a state income tax. Nearly 16 percent of South Dakotans claimed the state and local sales tax deduction in 2011.