House Passes War Supplemental Bill That Includes Small Business Tax Relief

With a lack of progress on a House/Senate conference on a minimum wage and tax relief package, the House on March 23, 2007 approved, by a vote of 218 to 212, a supplemental war funding bill that also includes the increase in the minimum wage and the $1.3 billion in tax incentives for small businesses that had previously passed the House. Senate Finance Committee Chair Baucus indicated that he may also add the Senate-passed minimum wage bill that includes $8.3 billion in tax incentives as an amendment to the Senate's war supplemental bill, and perhaps some additional tax provisions as well.

The $1.3 billion tax package that makes up the House-passed legislation includes some small business provisions similar to the Senate legislation -- focused on expanding the Code Sec. 179 small business expensing election and the Work Opportunity Credit. Small business provisions unique to the House legislation relate to a tax credit for Social Security taxes on employee tips, would allow some small business credits against the alternative minimum tax, and would allow a husband and wife to operate a business joint venture without being a partnership. Other tax provisions included in the House legislation would deny the lowest capital gain rate to certain qualifying children, suspend interest and penalties if the IRS fails to comply with certain notice requirements, and accelerate some corporate estimated tax payments.

Appending the minimum wage/small business bill to the war supplemental does not appear to give it a brighter future. The Administration has threatened to veto the war supplemental legislation due to troop pullout requirements unrelated to the minimum wage/small business issues, but also criticized the inclusion of provisions that were not germane to the war effort.