• House and Senate Race for the Finish
• Gulf Opportunity Zone Act of 2005 and What it Means for Small Business
• House Small Business Committee Democrats Release Report on Challenges Minorities Face in Access to Capital
• Member Poll: Finding Financing – Extended Through December

House and Senate Race for the Finish

As the end of the year quickly approaches, the House and Senate struggle to make a deal on budgetary concerns before the end of this session of Congress. The House quickly passed a stand-alone bill to extend the increased alternative minimum tax (AMT) exemption amount through 2006 with adjustments for inflation (HR4096). Representatives also passed a stand-alone Gulf Coast reconstruction tax incentive bill (HR 4440) and a bill to extend certain tax breaks that were due to expire (HR 4388). All of these bills have been sent to the Senate for consideration. Many of these provisions were set to be included in other appropriations bills and the tax reconciliation package but fearing those bills will not get through negotiations, the House passed them separately. Thus far, Senate leaders do not seem interested in passing the AMT exemption extension alone because they hope the whole package is still going to pass after negotiations. Democrats oppose pulling the extension out of the tax reconciliation package because it would leave room for Republicans to include extensions for the capital gains and dividends tax breaks. Senate Republicans do plan on agreeing to a Gulf Coast tax incentive package before the end of the year. The terms of this bill are up in the air, however. The House bill does not include tax incentives for casinos, tanning salons, liquor stores, and massage parlors. Senator Trent Lott (R-MS) and Bush Administration officials have voiced opposition to the exclusion of legal businesses in the deal. Battles over capital gains and dividends tax breaks and drilling in the Arctic National Wildlife Refuge continue to challenge House and Senate lawmakers in the negotiations of the tax reconciliation and budget-cutting reconciliation, respectively. The NASE continues to follow the work of Congress and measure the effect on micro-business. Tell your Members of Congress what you think by visiting the online NASE Legislative Action Center at http://advocacy.NASE.org. Gulf Opportunity Zone Act of 2005 and What it Means for Small Business The stand-alone Gulf Coast tax incentive package is likely to be debated and agreed upon by the end of the year. Our partners at the Small Business Legislative Council have laid out this summary of the Gulf Opportunity Act of 2005’s effect on small business in the GO Zone: Provides 50 percent bonus depreciation for equipment placed in service by December 31, 2007 to help businesses rebuild in the GO Zone. Enhances Section 179 expensing for GO Zone small businesses through December 31, 2007 from $100,000 to $200,000 and increases the phase-out floor from $400,000 of annual investments to $1 million. Allows small timber owners in the GO Zone (those owning less than 500 acres of timber) to expense up to $20,000 (up from $10,000) of reforestation costs incurred from August 27, 2005 through 2006. Allows businesses in the GO Zone with less than 200 employees to claim an employee retention tax credit of up to $2,400 per employee, if the firm keeps workers on the payroll while the business is inoperable through December 31, 2005. Creates additional tax-exempt bond authority to help rebuild the devastated infrastructure in the GO Zone -- $7.9 billion for Louisiana; $4.8 billion for Mississippi; and $2.1 billion for Alabama. For more information, visit http://thomas.loc.gov and search for HR 4440. House Small Business Committee Democrats Release Report on Challenges Minorities Face in Access to Capital John Barrow House Small Business Committee Democrats, lead by Ranking Democrat Nydia Velázquez (D-NY), released a report highlighting minority business owners’ plight in securing capital and accessing the federal marketplace. Minority business owners make up 4.1 million of the nation’s firms and employ over 7 million workers. “Minority entrepreneurs represent the future of this nation’s economy,” said Velázquez. “It is this nation’s minority business owners that are spurring job creation and economic development – yet even with these great strides, they have a number of obstacles standing in their way.” Nydia Velazquez The report found that minority business owners have more difficulty in accessing capital in the way of smaller bank loans and less venture capital investment. Additionally, while the federal contracts increased by three percent over all, contracts to minority entrepreneurs decreased by nine percent. Representatives Velázquez and John Barrow (D-GA) have each introduced bills to help minority business owners. Velázquez’s bill creates an SBA investment program that would give priority to minority business owners and Barrow’s legislation would update and modernize the SBA’s 8(a) program, a development program designed to help minority entrepreneurs access federal contracts. “There is a serious business ownership divide in this country when minorities make up nearly one-third of the population, but own only 15 percent of businesses,” said Barrow. “The 8(a) program is the country’s principal minority business development initiative, but it’s been almost 20 years since it was last updated. [The bill] will bring the 8(a) program up to speed with the times and help ensure that America’s emerging minority-owned businesses get a fair shake at government contracts.” Member Poll: Finding Financing – Extended Through December We know this is a busy time of the year for you. That’s why we’re extending the current member poll through December. Take time out to tell the NASE how you have handled the financing of your business in this month’s online poll. Let the NASE know your opinions by visiting the MyNASE Web site at http://my.NASE.org/. Log in to your free MyNASE Web Account. If you have not set up an account, you can do so at http://my.NASE.org/ with your member number. Let your voice be heard in the association by taking this survey during the month of December.