Domenici Press Release 7/9/96

Federal Government
Senator Pete Domenici Press Release

DOMENICI ANNOUNCES SMALL BUSINESS EMPLOYEE/EMPLOYER BENEFITS IN BILL THAT ALSO CONTAINS 90-CENT MINIMUM WAGE INCREASE.

FOR IMMEDIATE RELEASE                    CONTACT:  CHRIS GALLEGOS
July 9, 1996                                       (202) 224-7082

SENATE PASSES SMALL BUSINESS JOB PROTECTION ACT

Bill With Minimum Wage Provisions
Also Helps Employees of Small Businesses
WASHINGTON -- Senator Pete Domenici today announced that the Senate has passed the Small Business Job Protection Act of 1996, a bill that will, among other things, provide incentives for small business owners to provide retirement pensions for their workers.

Domenici voted for the bill that cleared the Senate on a 74-24 vote. In addition to a 90-cent increase to the minimum wage, the bill also includes tax provisions dealing with small businesses, S corporations, pension simplification, and the extension of certain expiring tax provisions.

"The Senate believes that it is worth sending the small business tax relief to the President again with this minimum wage agreement," Domenici said.

"Despite the smothering nature of our current tax code, small business is the fastest growing, most vibrant sector of our economy. This bill provides much needed relief so that businesses can create even more new jobs," he said.

Thirty-six million Americans work for small businesses that can't afford to provide pensions to their employees. The bill creates a simple pension plan that will allow small businesses tax- favored treatment when they establish pension plans for their workers, and it eliminates most of the red tape associated with creating a pension plan.

This bill contains tax provisions passed by Congress last year in the Balanced Budget Act which was vetoed by President Clinton.

The bill must now go to a conference committee with the House of Representatives where differences in House and Senate-passed versions will be reconciled. The President has indicated that he will sign the bill when it is sent to him.

In New Mexico, about 97 percent of all companies can be identified as small businesses, and of those approximately 57 percent actually employ fewer than five people each.

Nationwide, there are five million employers in the United States today, of those 60 percent employ four employees or fewer and 94 percent employ fewer than 50 employees.

The legislation:

Creates a work opportunity credit designed to encourage the hiring of hard-to-place workers, replacing the targeted jobs tax credit.

Increases expensing for small businesses.

Changes the S corporation laws to make it easier for families to maintain their enterprises, in addition to extending a popular tax provision that allows employers to provide their workers with educational assistance on a tax favored basis.

Expands the IRA provisions for homemakers so that they can contribute $2,000 to an IRA.

Extends the research and development tax credit through December 31, 1997.

Begins the simplification of independent contractor and pension rules. Out of the six areas of tax law, the most complex for small business owners are the independent contractor rules, depreciation, alternative minimum tax, inventory accounting, pension rules and the home office deduction.

Contains revenue offsets to pay for the relief granted to small business and pensions. The bill reduces the deficit by $100 million in 1996 and by $1.1 billion in 1997.

Includes from the revenue offsets that were vetoed in the Balanced Budget Act last year, the reform of section 936 possessions tax credit, repeal of the 50 percent exclusion for financial institution loans, elimination of the interest allocation exception for certain nonfinancial corporations, revision of the expatriation tax rules.

The bill also reinstates the airport and airway trust fund taxes through April 15, 1997.

"I am pleased to support the tax title of this bill, however, we need comprehensive reform," Domenici said. "It is my sincere hope that we in the next Congress will enact comprehensive tax reform. If we enacted the USA tax plan I introduced with Senator Nunn, the tax code would get much simpler and economic growth would expand in all sectors of our economy."