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Senate fails to advance legislation shielding small businesses from tax increases

NRCA regrets the Senate's failure July 25 to advance S. 3413, the Tax Hike Prevention Act. The legislation, sponsored by Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Finance Committee Ranking Member Orrin Hatch (R-Utah), failed to advance in the Senate by a vote of 45-54. S. 3413 would have extended all tax rates originally enacted in 2001 and 2003 for individual taxpayers, including the owners of many small and mid-sized businesses in the roofing industry. NRCA strongly supported passage of this legislation in a recent letter to senators.

Immediately following the vote on S. 3413, the Senate passed S. 3412, the Middle Class Tax Cut Act, by a vote of 51-48. This legislation, which likely will be deemed unconstitutional because of procedural issues, would impose onerous tax increases on small and mid-sized businesses in the roofing industry. Specifically, S. 3412 would increase individual income tax rates, as well as capital gains and dividend tax rates for high earners, many of whom are business owners, beginning in 2013. The bill also would increase the federal estate tax to pre-2001 levels (from 35 percent with a $5 million exemption to 55 percent with a $1 million exemption).

As noted in a study recently released by Ernst & Young, New York, and the S Corp Coalition, raising taxes on high-earning individuals eventually will result in the loss of more than 700,000 jobs. This policy also would result in the loss of hundreds of billions of dollars across the U.S. economy. NRCA, which has been actively advocating in Congress for pro-growth tax rates, believes these tax increases and the resulting economic cost are unacceptable. NRCA calls on Congress to work together to find a path forward to avoid the effects of these tax increases on entrepreneurs.

For more information, contact Brandon Audap, NRCA's director of federal affairs, at baudap@nrca.net, or call (800) 338-5765.

7/27/2012  

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