WASHINGTON, D.C. – Relief for workers and small businesses was approved by the House Committee on Ways and Means, led by Chairman Jason Smith (MO-08), with new measures designed to help them navigate price spikes, worker shortages, and supply chain failures in President Biden’s economy. The legislation, called the “Small Business Jobs Act” (H.R. 3937) cuts IRS red tape for contractors and gig workers, helps small businesses raise capital, drives more investment and growth with new expensing provisions, and helps rural communities better compete.
In his opening remarks during consideration of the bill, Chairman Smith highlighted how the Small Business Jobs Act will break down barriers to opportunity and provides relief for Main Street America:
“Main Street has struggled in the Biden economy. We’ve heard directly from small businesses during our hearings around the country about the real challenges they face today. Their testimony exposed the painful reality that the economy under President Biden is harming small businesses.
“To help strengthen small businesses forced to navigate price spikes, worker shortages, and supply chain failures, the Ways and Means Committee is putting forward the Small Business Jobs Act, with solutions that cut IRS red tape, expand jobs and investment, and support rural communities.”
Click here to read Chairman Smith’s full remarks.
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Key Facts on the Small Business Jobs Act (H.R. 3937):
- Eliminates headaches and unnecessary costs for small businesses by fixing an IRS reporting rule that has not been inflation-adjusted in almost 70 years.
- Currently, business owners are required to send tax forms to contractors that provide more than $600 of work to their business.
- In the Ways and Means Committee field hearing in Peachtree City, Georgia, a small business owner reminded Congress that those rules have remained unchanged since 1954.
- This provision offers relief to American workers and small businesses by increasing the reporting threshold for subcontract labor from $600 to $5,000.
- Stops the attack on the gig economy and Americans by repealing Democrats’ new rule that has the IRS targeting gig workers and those who use Venmo or PayPal to sell items like a used couch, guitar, or concert tickets.
- In 2021, Democrats reduced the IRS reporting threshold for these transactions from $20,000 to $600.
- The Biden Administration knows this rule is unfair and unworkable, which is why they have already delayed implementation this year.
- Repealing this rule will ensure Americans aren’t saddled with a mountain of paperwork, confusion, or taxes that they don’t owe.
- Increases U.S. innovation and jobs by growing small business access to funding by expanding a current tax incentive to investors in startups organized as S Corporations.
- Currently, these tax benefits are available only to investors in startups organized as C Corporations – leaving out S Corporations, which represent nearly half of all U.S. business entities.
- According to U.S. Census data, startup companies less than five years old create the majority of net new jobs in our economy, creating 1.7 million jobs per year.
- Encourages investment in new equipment and production capacity by increasing immediate expensing for small businesses to $2.5 million.
- Builds on successful policy from the 2017 tax reform law, which doubled the expensing limit from $500,000 to $1 million.
- With this provision, small businesses like farms and machine shops can afford new equipment and expand their businesses. Their investment raises productivity, boosts wages, and creates more jobs.
- Delivers greater economic development and opportunity with a new Rural Opportunity Zone program that will revitalize struggling communities.
- Opportunity Zones (OZs) were a major success from the 2017 tax reform law. They attracted investment and jobs to low-income communities across the country that were struggling to attract investment and capital.
- While being the largest economic development program, investments have tended toward urban areas, which received 95 percent of OZ investment.
- This provision will allow rural communities to benefit from the same recovery and development OZs have delivered to urban areas.