I 108th CONGRESS 2d Session H. R. 5093 IN THE HOUSE OF REPRESENTATIVES September 15, 2004 Mr. English introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Internal Revenue Code of 1986 to provide for small business tax incentives, to amend the Fair Labor Standards Act of 1938 to increase the minimum wage and to increase the exemption for annual gross volume of sales made or business done by an enterprise, and for other purposes.

1.

Small business tax incentives

(a)

Increase in section 179 expensing

(1)

Increase in dollar limitation made permanent

Paragraph (1) of section 179(b) of the Internal Revenue Code of 1986 (relating to dollar limitation) is amended by striking $25,000 ($100,000 in the case of taxable years beginning after 2002 and before 2006) and inserting $100,000. (2)

Increase in threshold for reduction of dollar limitation

Paragraph (2) of section 179(b) of such Code (relating to reduction in limitation) is amended by striking $200,000 ($400,000 in the case of taxable years beginning after 2002 and before 2006) and inserting $500,000. (3)

Inflation adjustment

Paragraph (5) of section 179(b) of such Code (relating to inflations adjustments) is amended to read as follows: (5)

Inflation adjustments

(A)

Dollar limitation

In the case of any taxable year beginning in a calendar year after 2004, the $100,000 amount in paragraph (1) shall be increased by an amount equal to— (i)such dollar amount, multiplied by (ii)the cost-of-living adjustment under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting calendar year 2002 for calendar year 1992 in subparagraph (B) thereof. (B)

Phaseout amount

In the case of any taxable year beginning in a calendar year after 2005, the $500,000 amount in paragraph (2) shall be increased by an amount equal to— (i)such dollar amount, multiplied by (ii)the cost-of-living adjustment under section 1(f)(3) for the calendar year in which the taxable year begins determined by substituting calendar year 2004 for calendar year 1992 in subparagraph (B) thereof. (C)

Rounding

(i)

Dollar limitation

If the amount in paragraph (1) as increased under subparagraph (A) is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000. (ii)

Phaseout amount

If the amount in paragraph (2) as increased under subparagraph (B) is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.. (4)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after December 31, 2004. (b)

Work opportunity credit, welfare-to-work credit, and research credit allowed against alternative minimum tax

(1)

In general

Subsection (c) of section 38 of the Internal Revenue Code of 1986 (relating to limitation based on amount of tax) is amended by redesignating paragraph (4) as paragraph (7) and by inserting after paragraph (3) the following new paragraphs: (4)

Special rules for work opportunity credit

(A)

In general

In the case of the work opportunity credit— (i)this section and section 39 shall be applied separately with respect to such credit, and (ii)in applying paragraph (1) to such credit— (I)subparagraph (A) shall not apply, and (II)the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the work opportunity credit, the welfare-to-work credit, or the research credit). (B)

Work opportunity credit

For purposes of this subsection, the term work opportunity credit means the credit allowable under subsection (a) by reason of section 51(a). (5)

Special rules for welfare-to-work credit

(A)

In general

In the case of the welfare-to-work credit— (i)this section and section 39 shall be applied separately with respect to such credit, and (ii)in applying paragraph (1) to such credit— (I)subparagraph (A) shall not apply, and (II)the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the welfare-to-work credit or the research credit). (B)

Welfare-to-work credit

For purposes of this subsection, the term welfare-to-work credit means the credit allowable under subsection (a) by reason of section 51A(d)(2). (6)

Special rules for research credit

(A)

In general

In the case of the research credit— (i)this section and section 39 shall be applied separately with respect to such credit, and (ii)in applying paragraph (1) to such credit— (I)subparagraph (A) shall not apply, and (II)the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the research credit). (B)

Research credit

For purposes of this subsection, the term research credit means the credit allowable under subsection (a) by reason of section 41.. (2)

Conforming amendments

(A)Subclause (II) of section 38(c)(2)(A)(ii) of such Code is amended— (i)by striking or after employment credit and inserting a comma, and (ii)by inserting , the work opportunity credit, the welfare-to-work credit, or the research credit after employee credit. (B)Subclause (II) of section 38(c)(3)(A)(ii) of such Code is amended by inserting , the work opportunity credit, the welfare-to-work, or the research credit after employee credit. (3)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after December 31, 2004.

2.

Standard home office deduction

(a)

In general

Subsection (c) of section 280A of the Internal Revenue Code of 1986 (relating to disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc.) is amended by adding at the end the following new paragraph: (7)

Standard home office deduction

In the case of a use described in paragraph (1), (2), or (4), and in the case of a use described in paragraph (3) where the dwelling unit is used by the taxpayer during the taxable year as a residence, the deductions allowed under this chapter for the taxable year by reason of being attributed to such use shall not be less than $2,500.. (b)

Standard home office deduction not subject to limitation

Paragraph (5) of section 280A(c) of such Code (relating to limitation on deductions) is amended by striking In the case of and inserting Except as provided in paragraph (7), in the case of. (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

3.

Minimum wage provisions

(a)

Increase in tip income

Section 3(m)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(m)(1)) is amended by adding before the semicolon the following: , except that, for purposes of this paragraph, the cash wage paid such employee shall be not less than $3.25 an hour beginning October 1, 2005. (b)

Minimum wage

(1)

Exemption for small employers

Section 6 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206) is amended— (A)in subsection (a), by inserting after Every employer the following: who employs ten or more employees; and (B)in subsection (b), by inserting after Every employer the following: who employs ten or more employees. (2)

Phased increase

Section 6(a) of such Act (29 U.S.C. 206(a)) is amended by striking paragraph (1) and inserting the following new paragraph: (1)except as otherwise provided in this section, not less than $5.15 an hour through the period ending September 30, 2005, not less than $5.50 an hour during the year beginning October 1, 2005, not less than $6.00 an hour during the year beginning October 1, 2006, and not less than $6.50 an hour during the year beginning October 1, 2007.. (c)

Effective date

The amendment made by subsection (b)(1) shall apply beginning October 1, 2005.

4.

Increased exemption for annual gross volume of sales made or business done by an enterprise

Section 3(s)(1)(A)(ii) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(s)(1)(A)(ii)) is amended to read as follows: (ii)is an enterprise whose annual gross volume of sales made or business done, exclusive of excise taxes at the retail level that are separately stated, is not less than $500,000 through the period ending September 30, 2005, not less than $650,000 during the year beginning October 1, 2005, not less than $800,000 during the year beginning October 1, 2006, and not less than $1,000,000 during the year beginning October 1, 2007..

5.

Earned income exclusion under the SSI program

(a)

In general

Section 1612(b) of the Social Security Act (42 U.S.C. 1382a(b)) is amended— (1)by striking and at the end of paragraph (22); (2)by striking the period at the end of paragraph (23) and inserting ; and; and (3)by adding at the end the following: (24) (A)if such individual does not have an eligible spouse, the amount (if any) by which the minimum wage rate in effect for the month under section 6 of the Fair Labor Standards Act of 1938 multiplied by the number of hours for which such individual is gainfully employed during the month exceeds the total amount of earned income of such individual excluded by the preceding provisions of this subsection for the month; or (B)if such individual has an eligible spouse, the amount (if any) by which the minimum wage rate in effect for the month under section 6 of the Fair Labor Standards Act of 1938 multiplied by the total number of hours for which such individual and such spouse are gainfully employed during the month exceeds the total amount of earned income of such individual and such spouse excluded by the preceding provisions of this subsection for the month.. (b)

Effective date

The amendments made by subsection (a) shall take effect on October 1, 2005, and shall apply to benefits for months beginning on or after such date.