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House-Senate Conference on Small Business Tax Bill Set to Begin Tuesday

Monday, July 29, 1996

OnLine

The House-Senate conference on the small business tax bill (HR 3448) is set to meet beginning Tuesday morning to work out the differences between the two versions of the bill.

Staffs of the House and Senate tax-writing committees met over the weekend and on Monday to determine how quickly they can reach agreement to resolve their differences.

Also the subject of staff meetings over the past several days is the health insurance reform bill (S. 1028, HR 3103). The spirit of compromise that led to an agreement on the Medical Savings Account issue prior to conference has not been extended to other items under discussion, such as the portability issue and the treatment of mental health benefits, congressional sources said. Thus, a conference agreement might not be reached by week’s end, they added.

The expectation that an agreement on the small business tax bill will be reached quickly means that it may be considered on the floor prior to floor consideration of the health insurance reform bill. Earlier, legislators indicated the small business tax bill, which contains a proposed increase in the minimum wage, had to be voted on for final passage at the same time as the health reform bill.

One issue confronting both conferences is the revenue-raising ex-patriation tax. Not only must the conferees resolve the differences between the House- and Senate-passed versions of the provision, but they also must decide whether the revenues will be applied to the health care bill or to the small business tax bill.

Split the difference

If the conferees on the small business tax bill follow tradition, they will tend to split their differences down the middle, rather than one side simply agreeing to the other’s position.

House Ways and Means Committee Chairman Bill Archer, R-Texas, told reporters last week he expects the conferees to first agree on the size of the bill that will be reported out of conference, and then they will work backwards to determine which provisions will be included in the final version.

The two versions start with the same core -- increasing the expensing limitation for small businesses and offsetting it with a phase-out of the possessions tax credit -- but the Senate went several steps further than the House by extending expired tax breaks and expired aviation taxes, and by including a variety of other reform items.

The bellwether issue in the conference is the research and experimentation tax credit extension, which was done prospectively in the Senate version, but not the House. Though Archer said he wants to keep the bill as small as possible and he resisted extending the credit in the Ways and Means Committee, its inclusion in the conference agreement would indicate that the conferees are more likely to agree on a bill that is closer in size to the Senate’s bill than the House’s, congressional sources said.

Welfare Bill Conferees Drop Adoption Provision: The conferees on the welfare reconciliation bill (S. 1956) dropped the refundable tax credit provision that was added on the Senate floor.

The version of the credit in the bill differs from the version of the bill (HR 3286) that passed the House and that the Senate Finance Committee approved.

Senate Finance Committee Chairman Bill Roth, R-Del., objected to the welfare bill’s language on the grounds that the credit would be refundable and that the credit was not offset to overcome its more than $1 billion revenue loss.

Proposed Tax Relief For Washington Under Attack: A proposal to grant tax relief to Washington, D.C., came under fire Sunday from White House Chief of Staff Leon Panetta.

The proposal, backed by Speaker of the House Newt Gingrich, R-Ga., but not by Archer, would replace the current tax system in the city with a 15% flat tax rate on city residents.

Panetta objected to the provision on the grounds that it addresses the problems of Washington, but not those of other inner-cities. "If you just provide an across-the-board tax cut for Washington, D.C., and we’re going to go out of our way to help congressmen and senators and others that live in Washington, D.C., that is just not going to happen," he said on ABC.