Our good friends at Sohodojo.Com go big time with Inc.Com; Tax Legislation is difficult these days; The Distressed Communities Compromise of May 23, 2000 has been put to bed, or has it.
1. As noted in The Taxman86 Speaks on O6/14/00, Small Business Owners are not very happy these days.
Front Page on the June 15, 2000 Inc.Com Web Site is the article "Small Biz: Death and Taxes don't mix," written by our good friends, Jim Salmons and Timlynn Babitsky, Hosts of Sohodojo - The Entrepreneurial Free Agent and Dejobbed Small Business R&D Lab.
Death tax repeal, and 100% deductible health insurance for the self-employed, both of which have passed the House several times since the fall of 1998 but still are not law today, are the favorites of Small Business Owners. Congratulations for a job well done.
2. Tax Notes has come a long way since the early 70's.
Tax Notes, the leading weekly Tax Journal for the true experts, and the rest of us mortals, has a great article in their June 5, 2000 issue, "Clinton and the Speaker Zone Out, Crash into the Tax Code," by Martin A. Sullivan, Economic Correspondent, p. 140, which compares the two proposals, Empowerment Zones vs. Renewal Community Zones, the President favors the former, and the Speaker of House favors the latter.
Apparently neither approach was liked by the bean counters at the Treasury [they lost out to politics]. Best of all will be the SUPER ZONES, those Empowerment Zones that qualify for Renewal Community Zone Status, and get the benefits of both programs in 2001.
The only issue we have with the article is the lack of confidence the author has in the free market when it comes to tax savings, especially when we are talking about tax deferral. Does the business world like tax free reorganizations, tax free exchanges, or the various other tax deferral schemes [comments from the peanut gallery] that are promoted? We think so.
Did IRC Section 1045 bring venture capital to the small [$50M or less] startups? We think so. Will IRC Section 1045 bring capital into Enterprise Zone Businesses within the existing 31 Empowerment Zone [9 new ones are forth coming], as defined by IRC Section 1397B? We think so. Is IRC Section 1031 important to the real estate industry? We think so.
However, as article points out, as further covered in other sections of the June 5, 2000 issue, there will be stand alone tax bills, and two, not one, tax reconcilation bills this session [July 15, 2000 and September 15, 2000]. What will pass, and what will be vetoed, only the Shadow knows, and he is not talking. The Marriage Penalty will be coming in the July 15, 2000 Reconcilation Bill, if anyone can agree on what the penalty is all about.
3. The Distressed Communities Compromise is still alive, maybe?
They agreed in the fall of 1999 to do Distressed Community legislation, then agreed again in the spring of 2000, then finally met in the White House to seal the deal on May 23, 2000, for all to see and hear [prior to the crucial China vote], but it still may not be done as of today June 15, 2000 says the Tax Analysts hot line.
Are the 95 Enterprise Communities [California has eight including San Diego] to be included, NO we are told, but the existing 31 Empowerment Zones are [how many Empowerment Zones are west of the Missisippi, seven we believe; count them]. Are the 95 Enterprise Communities important to the Vice President, apparently not since his NEW $500B ten year tax cut program [can he spare $2B for the Enterprise Communities] does not even mention them.
Jim Schneider, LL.M.
The Taxman86 Speaks... is copyright 1998-2010 by James E. Schneider, LL.M. Inc.