H.R. 9 Amendment: Substitute Amendment to H.R. 9 - Small Business Tax Cut Act

H.R. 9

Substitute Amendment to H.R. 9 - Small Business Tax Cut Act

April 19, 2012 (112th Congress, 2nd Session)

Staff Contact

Floor Situation

On Thursday, April 19, 2012, the House is scheduled to consider H.R. 9, the Small Business Tax Cut Act, under a rule. H.R. 9 was introduced by Majority Leader Eric Cantor (R-VA) on March 21, 2012, and was referred to the Committee on Ways and Means. On March 28, 2012, the committee held a markup and the bill was reported, as amended, by a vote of 21-14. The rule for consideration of H.R. 9 provides one hour of general debate equally divided and controlled by the chair and ranking minority member of the Committee on Ways and Means. The rule also makes in order one amendment in the nature of a substitute which is summarized below (courtesy of the staff of the House Committee on Ways and Means). For a summary of the underlying legislation, please see the Legislative Digest for April 19, 2012.

Bill Summary

 Amendment No. 1—Rep. Levin (D-MI): The Democrat substitute amendment would replace the Small Business Tax Cut Act with a proposal that appears very similar to the 20-percent deduction for qualified small businesses contained in H.R. 9—but with an additional limitation that virtually eliminates the tax relief provided to America’s small businesses. Specifically, the Democrat Substitute would limit the amount of the deduction to the amount of 100-percent bonus depreciation property placed in service by the taxpayer during the tax year.  According to the Joint Committee on Taxation (JCT), because of the imposition of this additional restriction, the Democrat substitute would provide only $287 million in total tax relief (only 6% of the $46 billion in tax relief provided under the base bill) over 2012-2022.

  • Because of this additional limitation, the Democrat Substitute would NOT appreciably benefit small businesses and would NOT promote job creation and economic growth.  Rather, the proposed limitation would effectively gut the underlying bill and the tax relief it provides.
  • The proposed limitation would also add considerable complexity to the deduction.  Small businesses would be required to calculate and evaluate three different limitations to determine the amount of their deduction – and then take the smallest of the three.
  • The Democrat Substitute is another example of Washington micromanaging business activity.  Small businesses should be trusted to invest the proceeds of the deduction as they see fit – such as by hiring new workers – rather than be forced to buy business property to claim the benefit if that specific type of investment does not happen to make business sense in this particular year.
  • Contrary to some claims, the Democrat substitute would not extend 100-percent bonus depreciation for any business.  In fact, it would not confer any additional tax benefits at all to any business as compared to the underlying bill.  Rather, the Democrat Substitute would drastically limit the applicability of the 20-percent deduction contained in H.R. 9.