WASHINGTON Industry representatives praised legislation Thursday that would give tax breaks to community banks and other small businesses.
The bill, introduced Wednesday by Rep. Scott McInnis, R-Colo., would allow more small banks to become S corporations, which do not have to pay taxes on earnings before distributing them to shareholders, whose dividends are taxed individually.
Rep. McInnis legislation would afford many small businesses, particularly community banks, needed relief from punitive double taxation, Bob Gulledge, chairman of the Independent Community Bankers of America, said in a press statement. This bill is a bright spot for our nations small banks and the communities they serve.
The bill would double to 150 the number of eligible shareholders an S corporation could have, allow shares of those companies to be held in individual retirement accounts, and clarify that bank investments held for liquidity and safety-and-soundness purposes would not count against limits on passive income.
Americas small and community banks provide small businesses and individuals the means to succeed and grow, Rep. McInnis said in a news release. They are the financial backbone of our communities. This bill will change and reform the tax laws governing subchapter S corporations to provide more opportunity for not only small businesses, but especially small and community banks, by making the tax system more fair, more equitable, and more simple.
Similar bills were introduced in 1999 by Sen. Wayne Allard, R-Colo., and Rep. McInnis. The measures were included in a tax relief bill passed by Congress last year that was vetoed by then-President Clinton.