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Rep. Kind Co-Authors Legislation Benefiting Small & Family-Owned Businesses in Western Wisconsin

October 25, 2007
Press Release

Tax Relief Measure to Help Area ‘S Corporations’ Reinvest, Grow their Business

Washington, D.C. – In his continuing effort to find ways to bolster small business growth and investment, U.S. Rep. Ron Kind (D-WI), member of the powerful tax-writing House Committee on Ways and Means has co-authored the Small Business Growth and Opportunity Act (H.R. 3874), which would modify an unreasonable penalty paid by “S-Corporations.”

“There are a number of commonsense changes we can make to the tax code that will have huge returns in terms of growth and investment – and this is one of them,” Rep. Kind said. “My goal on the Ways and Means Committee is to look out for the small and family-owned businesses that drive the economy in Wisconsin and across the country. This bill speaks to that, reducing a penalty on S corporations, and thus encouraging them to reinvest the savings into growing their business and creating jobs.”

There are 3.8 million registered S corporations nationwide, 3,400 in Wisconsin alone. They are small and family-owned businesses that have between 1 and 100 shareholders, and are taxed differently than large corporations. Right now, S corporations are taxed twice on assets they sell within 10 years of converting to this tax classification – making the sale and reinvestment of these assets prohibitively expensive and hindering growth and job creation. In some states, the double-tax burden can reach as high as 70 percent.

Requiring S corporations to hold on to unproductive and inefficient assets for 10 years limits cash flow and availability and encourages excess borrowing. To provide some relief, the Small Business Growth and Opportunity Act would allow S corporations to liquidate unproductive assets after seven years – a more realistic business cycle – freeing up capital to be used to grow the business and create new jobs.

“A three-year reduction in this unreasonable and unproductive penalty will be a good start to easing the overall tax burden on small and family-owned businesses, helping them grow and prosper in an increasingly competitive market,” Rep. Kind added.

Ferrellgas, an S corporation with employee-owned distribution centers throughout the Third Congressional District in Bloomington, Boscobel, Cochrane, Eau Claire, Hudson, Loyal, Platteville, Richland Center, and Sparta, will benefit from the relief provided by the bill.

"We're delighted that Congressman Kind is committed to the success of private industry in the region and across our country,” said Gene Caresia, Vice President, Human Resources and Legal at Ferrellgas. “Ferrellgas is proud to be 100 percent owned by our workers, and our employee-owners will benefit from the Congressman's work to address this onerous and outdated tax burden. We are confident that it will also have considerable benefits for other private and small and family owned companies throughout Wisconsin."

U.S. Rep. Kagen (D-WI) introduced H.R. 3874 in the House this week with U.S. Rep. Kind (D-WI), as well as Jim Ramstad (R-MN), and Phil English (R-PA).