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house Bill H.R. 6756

Should Tax Deductions for Startups be Expanded?

Argument in favor

Small businesses make major contributions to the U.S. economy’s innovation and productivity. Supporting them via tax breaks will encourage their formation and success, benefiting both business owners and workers while promoting economic growth.

Terry's Opinion
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09/27/2018
Any help that can be given to small businesses should be expanded. Across America "mom and pop" shops are disappearing, being absorbed into larger companies.
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KyleCorley's Opinion
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09/27/2018
Start ups bring about new ideas and innovation to the US economy, so we should help them with tax breaks.
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Brian's Opinion
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09/27/2018
Small businesses make major contributions to the U.S. economy’s innovation and productivity. Supporting them via tax breaks will encourage their formation and success, benefiting both business owners and workers while promoting economic growth.
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Argument opposed

America's debt burden is already tremendous, and this bill will cost over $5 billion in lost tax revenue. Additionally, small businesses, like larger corporations, already received tax relief in last year’s GOP tax bill.

Shannon's Opinion
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09/27/2018
this deduction should be eliminated for any startup that has venture capital funding. those startups don't need this deduction to help them get off the ground.
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Catherine's Opinion
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09/27/2018
I think that 7 years is long enough for a company to find out if they can turn a profit or not. 15 years is unreasonable.
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Bryan's Opinion
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09/27/2018
No more tax breaks for companies. We need higher taxes on the wealthy, much much higher taxes. Those who create startups are already on average more wealthy than the average population. They don’t need more breaks.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on Finance
  • The house Passed September 27th, 2018
    Roll Call Vote 260 Yea / 156 Nay
      house Committees
      Committee on Ways and Means
    IntroducedSeptember 10th, 2018

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What is House Bill H.R. 6756?

This bill — known as the American Innovation Act of 2018 — would seek to to spur innovation by helping brand-new businesses with startup costs and capital by expanding tax deductions available to them. A breakdown of its three main components can be found below.

The bill would consolidate tax rules to allow startups to deduct up to $20,000 of startup and organizational costs from annual tax filings. Currently, the deduction limit is $5,000 each for startup and organizational costs. Expenses that can’t be deducted immediately would be amortized over 180 months.

It’d also allow small businesses that are completely liquidated before the end of the 180-month period to have any unamortized amounts deducted to the extent allowable by law. In the case of any active trade or business that’s completely disposed of or discontinued before the end of the 180-month period, any unamortized startup expenditures may be deducted to the extent allowable under law.

Additionally, new companies that experience changes in ownership would be eligible to claim certain tax breaks that were previously limited. Specifically, a startup business’ pre-change net operating loss carryforwards, net operating losses, general business credit carryforwards, and general business credits would be available for use in a post-change year. Currently, an ownership change subjects a company to significant limitations.

Impact

Small businesses; startups; tax code; and the Internal Revenue Service.

Cost of House Bill H.R. 6756

The CBO estimates that enacting this bill would reduce tax revenue by $5.4 billion over the 2019-2028 period.

More Information

In-DepthHouse Ways and Means Committee Chairman Rep. Kevin Brady (R-TX) offered the following statement in support of Rep. Vern Buchanan’s (R-FL) bill to provide tax relief to startups as a way of encouraging economic growth:

“The American Innovation Act will increase innovation by helping new entrepreneurs move from the kitchen table to Main Street and beyond. The country that wins the innovation race wins the future, and it’s time for our tax code to help us get there. Last year we said goodbye to America’s old, broken tax code. Under our new system, we’re seeing incredible job growth, bigger paychecks, and a tax code that works on behalf of families and American businesses. Now it’s the time to ensure we never let our tax code become so outdated again.”

Rep. Darin LaHood (R-IL), a cosponsor of both this bill and the other two pieces of legislation in Tax Reform 2.0, adds that the full Tax Reform 2.0 package will bolster the American economy as a whole:

“Last year, Republicans reformed our nation’s tax code for the first time in more than 30 years, streamlining the filing process, allowing individuals to keep more of their hard-earned money, and empowering American business to be more competitive around the globe. [Tax Reform 2.0 builds] upon our tax reform successes by advancing legislation that would provide certainty to taxpayers, expand retirement savings for individuals and families, and unleash America’s innovative spirit. This is another step in making certain taxpayers continue to have a tax code that works for them. With take-home pay up 4.9%, wages rising at a rate not seen in nine years, small business optimism at record highs, [and] job creation regularly beating expectations... I look forward to working to get Tax Reform 2.0 passed in the House and to President Trump’s desk, so individuals and families… can continue to see more money in their pockets and our local small businesses can further innovate to stay competitive in a growing global economy.”

Democrats have opposed the Tax Reform 2.0 plan, especially since the discussion on it — like those on Tax Cuts and Jobs Act — have excluded Democrats. Rep. Steny Hoyer (D-MD) said:

“Instead of repeating Republicans’ mistakes from December by considering a second tax bill through another closed process, without any substantive hearings or input from the American people, Democrats have a different approach. Democrats want to do tax reform the right way — in a bipartisan fashion and with a commitment to fiscal sustainability.”

Minority Leader Rep. Nancy Pelosi (D-CA) calls the Republicans’ 2.0 effort “just as destructively tilted toward the wealthiest 1 percent as the original.

Rep. Leonard Lance (R-NJ) has called Republicans’ attempt to pass further tax cuts through Tax Reform 2.0 an “exercise in futility,” arguing that it would never pass the Senate.

This legislation passed the House Ways and Means Committee by a voice vote with with the support of 26 cosponsors. It also has the support of the The Heartland Institute, the Florida Chamber of Commerce, and the National Federation of Independent Business.


Of NoteTax Reform 2.0 seeks to expand the Tax Cuts and Jobs Act. It’s a follow-up to House Ways and Means Committee Chairman Kevin Brady’s (R-TX) “listening session framework” released in July 2018. In total, there are three bills in Tax Reform 2.0, including this bill. The other two bills are the Protecting Family and Small Business Tax Cuts Act of 2018 (H.R. 6760) and Family Savings Act of 2018 (HR 6757). In sum, the total tax revenue loss for all three bills in Tax Reform 2.0 is projected to be $657 billion.

In 2018, the U.S. dropped out of Bloomberg’s list of the top 10 most innovative countries in the world. This is a problem, as many believe that the nation that wins the innovation race wins the future.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / skynesher)

AKA

American Innovation Act of 2018

Official Title

To amend the Internal Revenue Code of 1986 to promote new business innovation, and for other purposes.

    Any help that can be given to small businesses should be expanded. Across America "mom and pop" shops are disappearing, being absorbed into larger companies.
    Like (22)
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    this deduction should be eliminated for any startup that has venture capital funding. those startups don't need this deduction to help them get off the ground.
    Like (22)
    Follow
    Share
    Start ups bring about new ideas and innovation to the US economy, so we should help them with tax breaks.
    Like (12)
    Follow
    Share
    I support lower taxes in any form.
    Like (6)
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    Small businesses make major contributions to the U.S. economy’s innovation and productivity. Supporting them via tax breaks will encourage their formation and success, benefiting both business owners and workers while promoting economic growth.
    Like (5)
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    I think that 7 years is long enough for a company to find out if they can turn a profit or not. 15 years is unreasonable.
    Like (4)
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    Taxation is theft.
    Like (4)
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    More tax revenue is collected if you have more business' operating so, encouraging more startups by lessening the tax burden is the best possible way for the government increase revenues.
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    As an insurance agent that deals with many small businesses I know the struggles, they are going through. Many of them cannot afford to hire new employees because of the rising costs that they are experiencing by starting their businesses. Giving them more tax deductions will help to boost the economy in many ways. They will be able to hire more people. They can expand their businesses and they can afford to advertise. Looking out for the small business owner is truly looking out for an American citizen that is valuable.
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    Small businesses need just as much support as big businesses. Small businesses employ more people in the long run as do big businesses.
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    Because it can be a huge struggle to get into business. You sometimes have to spend money and it can be hard on the bottom line
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    This is the epitome of the hypocritical behavior and ideology of so called “business people.” They want a free ride but won’t help anyone eat or stay healthy. I’m so sick of having business dictate the rules of society rather than society dictating the rules of business. Stop legal bribery. Eliminate paid lobbyists. Make our elections government funded and limited to short periods of time. Campaign finance reform will solve many of the log jams we have. Eliminate districting by party in power, let mathematics and computers do what they are best at, crunching numbers. Maps should be drawn by feeding raw data to a computer that does not take into anything more than population density and physical geographic barriers like rivers and mountains.
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    Helping small business to get off the ground will expand the possibility for the middle class to grow or maintain themselves
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    Help grow our amazing capitalist economy
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    All of us need less taxes. That means our representatives need to STOP SPENDING.
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    Help small business!
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    Taxes are a burden that should be lifted as much as possible from every aspect of life
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    One of the the most ridiculous things about the US is the propagandistic support of "Capitalism" and the subsequent legislative addition of business/corporate welfare. Businesses need to pay taxes. They consume resources from the community (roads, employees, etc.) and should be required to give back. If the concern is that the entrepreneur is facing anti-competitive practices, and therefore cannot have a chance to thrive, then stop giving large corporations tax breaks and other forms of welfare. No for-profit business should be exempt from taxation. None. No business should receive governmental support until every single resident of the United States is has healthcare and a living wage.
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    Yes! Businesses create jobs. Allowing start-ups to not be strangled by taxes will go a long way toward any business being able to succeed and create new jobs.
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    No more tax breaks for companies. We need higher taxes on the wealthy, much much higher taxes. Those who create startups are already on average more wealthy than the average population. They don’t need more breaks.
    Like (2)
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