FOR IMMEDIATE RELEASE                    CONTACT:  CHRIS GALLEGOS
August 2, 1996                                     (202) 224-7082

SMALL BUSINESS JOB PROTECTION ACT TO BECOME LAW

Domenici Says Bill With Minimum Wage Provisions
Also Helps Employees of Small Businesses

The Small Business Job Protection Act of 1996, in addition to the small business initiatives, also increases the minimum wage by 90-cents, to $5.15 an hour over the next year.

Domenici voted for the bill that cleared the Senate on a 76-22 vote, thus completing congressional action on the bill. It will now be sent to the President.

Initiatives in the bill include tax provisions dealing with small businesses, S corporations, pension simplification, and the extension of certain expiring tax provisions.

"I believe this is the most significant business legislation we have passed this year. For New Mexico's economy, which is dominated by small businesses, I think this bill will be a great benefit," Domenici said.

"New Mexico has one of the best environments in the nation for Hispanic and small business growth, despite the smothering nature of our current tax code. In this bill we help some workers by increasing the minimum wage, and provide incentives for small business owners to grow," 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.

According to a U.S. Census Bureau Report, at the end of 1992, one in every five businesses in New Mexico were Hispanic-owned, which makes New Mexico the state with the highest percentage of Hispanic-owned businesses in the U.S. In addition, the number of women-owned businesses in the state increased 149.5 percent, or 15.0 percent annually, from 1982 to 1992.

There are more than seven million women-owned businesses in the U.S. and they employ approximately 15.5 million people. Women- owned firms contribute over $1 trillion in sales to the economy. Between 1987 and 1992, the number of women-owned businesses nationally increased by 43 percent.

The legislation:

Allows more than two million Americans, who work for tax-exempt organizations, the first ever opportunity to sign up for 401(k) savings plans.

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 for equipment from the current law level of $17,500 to $25,000 to 2003. This proposal would be effective for taxable years beginning after Dec. 31, 1996.

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. It increases the number of shareholders from 35 to 75.

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

Extends the research and development tax credit; expands the definition of start-up firms; and allows 75 percent of amounts paid to a qualified research consortium for qualified research to be eligible for the credit.

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.

"While this bill is a step in the right direction, I firmly believe we need comprehensive reform," Domenici said. "It is my sincere hope that we in the next Congress will enact comprehensive tax reform. If enacted, the USA tax plan I introduced with Senator Nunn would make the tax code much simpler and economic growth would expand in all sectors of our economy."

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