The new HR 4213 bill, or the “American Workers, State, and Business Relief Act of 2010,” which is moving to conference committee, in order to compromise the differences between the Senate and House versions, has some provisions that include extending unemployment benefits to 11/30/2010, COBRA for the unemployed, Medicare payments to doctors, and the deadline to claim the home-buyer tax credit (potentially to September 30 for those with contracts secured by April 30th). One provision in the House bill if signed into law by the President includes curtailing tax benefits provided to S Corporations which represent 3+ million small businesses. Specifically, it would target S corporations with 3 or fewer shareholders who are active, and whose services or “reputation and skill,” are the “principal asset” to the revenue of the S Corporation.
Those in favor of this provision, like Professor Linda Beale, argue that it creates a more level playing field, or “social justice” as many would call it, by bringing parity in terms of the taxes most Americans pay on compensation. Linda states that it is not a perfect law but it is a step in the right direction. Others argue, like Joe Kristan, that the language in the provision is vague, and it has flaws in the sense that there are potential ways around it due to the ambiguous terminology used. Those in opposition also state that it gives larger businesses an advantage or penalizes small service businesses by taking away their tax benefits.