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Small Business Tax Bill to Be Offset with Phaseout of Possessions Tax Credit

Monday, May 13, 1996

OnLine

Small business tax relief may be on the way: The House Ways and Means Committee May 14 will mark up legislation that would assist low-income workers and small businesses, and would pay for the package by phasing out the possessions tax credit and by limiting other tax benefits.

"This package creates jobs, expands worker training and education opportunities and increases take-home pay for low-wage workers," House Speaker Newt Gingrich (R-Ga.) and House Majority Leader Dick Armey (R-Texas) said in a joint statement.

The current strategy in the House is to add the package to the Fair Labor Standards Act (HR 2391), which includes a minimum wage increase.

Incentives included in the bill would increase expensing limitations for small businesses, reinstate the tax exclusion on employer-provided educational assistance and extend the work opportunity tax credit.

In addition to the phase out of the Section 936 possessions tax credit (which gives a tax break to American manufacturing companies that set up facilities in U.S. possessions such as Puerto Rico), the package includes a repeal of the 50 percent interest income exclusion for financial institution loans to employee stock ownership plans.