House passes tax portion of small-business bill

The House on Tuesday voted 247-170 to advance legislation providing tax breaks to small businesses to the Senate. At least 5 Republicans supported the bill's passage. 

The tax portion of the bill is expected to be combined with loan incentives for small businesses before it travels to the Senate. The upper chamber is expected to take up the legislation after it passes the so-called tax extenders bill. 

The small business bill is expected to attract several amendments in the Senate, including a fix for the estate tax.

During the House debate on the bill, Republicans blasted it for increasing taxes. They also deemed the loan portion of the bill as "TARP-like" because it grants the Treasury secretary temporary authority to make capital investments in small banks to increase the availability of credit to small businesses.  

"The majority is seeking to generate $7.1 billion in additional tax revenue but would only provide $3.6 billion in tax relief over the next decade," said Ways and Means ranking member Dave Camp (R-Mich.). "The rest of the money will be used to offset the cost of another bill, which was reported by the Financial Services Committee, that creates yet another TARP-like program."

Conservative lawmakers argued the loan portion of the bill will allow Treasury to create winners and losers among small-business owners. A similar concern was raised about larger banks seeking assistance from TARP.

Republicans were less opposed to the tax portion of the bill because it temporarily excludes from taxation the sale of qualified C corporation stock, and provides penalty relief for small businesses that invest in certain listed transactions. 

The bill also includes tax increases by limiting the use of Grantor Retained Annuity Trusts and making the highly corrosive fuel called "crude tall oil" ineligible for a cellulosic biofuel producer credit.