Today In Washington
November 17, 2017
Source: AEO Government Relations Team, Madison Services Group
Tax Reform: Next Steps
The Senate Finance Committee wrapped up its four-day conceptual mark-up late last night. Committee Chair Orrin Hatch (R-UT) released another revised Chairman’s Mark late Wednesday that repeals a provision that would protect small businesses from liability of contract workers, amongst other amendments. The Senate tax reform proposal will be likely be changed substantially, with Committee Member and Senate GOP Whip John Cornyn (R-TX) stating that GOP Senators “still have quite a bit of work to do” to ensure pass-throughs are properly addressed in the legislation. As is, the Senate proposal provides a 17.4% deduction for most pass-through entities. Additionally, several GOP Senators have expressed concerns about the repeal of the Affordable Care Act (Obamacare) individual mandate, and the effects of the $1.5 trillion proposal on the deficit.
Hours earlier, the House passed H.R. 1, the “Tax Cuts and Jobs Act.” The Senate bill differs substantially from the House bill, which generally taxes pass-throughs at a 25% rate. The House bill repeals the New Markets Tax Credit, which is preserved in the Senate proposal, and preserves the State and Local Tax (SALT) mortgage deduction whereas the Senate repeals SALT completely. The House bill also preserves the Obamacare individual mandate.
The full Senate is expected to vote on the GOP tax reform plan the week of November 27.
NDAA Passes the Senate
Yesterday, the Senate passed the FY 2018 National Defense Authorization Act. One of the few must-pass bills in Congress, it contains the following small business provisions:
- Requires the Small Business Administration (SBA) to conduct a study on small business participation on Multiple Award Contracts (MACs)
- Freezes HUBZone maps until January 1, 2020, and transitions the program to five-year map updates after 2020
- Provides state governors the ability to petition the SBA Administrator to designate areas that have an average unemployment rate at least 120% of national or state average, whichever is lowest, as HUBZones; petitions require annual resubmission
- Removes the qualifier “nonmetropolitan” from “state median income” when determining HUBZone program eligibility
- Requires the SBA to make a determination on a firm’s HUBZone eligibility within 60 days of application receipt
- Ensures that BRAC counties receive HUBZone eligibility for a full eight years beginning on the date the county was designated a BRAC
The NDAA is expected to be signed into law by the President today.
Shakeup at the Consumer Financial Protection Bureau
Consumer Financial Protection Bureau (CFPB) Director Richard Cordray is expected to resign at the end of the month. Office of Management and Budget (OMB) Director Mick Mulvaney is expected to be named CFPB’s interim director. Mr. Mulvaney will not be subject to a Senate confirmation hearing due to a rule that allows appointees that have already been confirmed by the Senate to take interim roles at other federal agencies. Mr. Cordray is expected to run for governor of Ohio in 2018.
H.R. 4424, a bill “To amend the Internal Revenue Code of 1986 to Provide an Exclusion from Gross Income for Interest on Certain Small Business Loans,” introduced by Rep. Blum (R-IA). Text for this bill is not yet available.
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