H.R.1959 - To amend the Internal Revenue Code of 1986 to protect small businesses from unemployment insurance premium increases by reason of unrepaid State advances. (119th Congress)
Summary
H.R.1959 aims to amend the Internal Revenue Code of 1986 to protect small businesses (defined as those with fewer than 500 employees) from increases in unemployment insurance premiums due to unrepaid state advances. The bill proposes that the usual reduction in tax credits for businesses in states with outstanding federal unemployment loans would not apply to these specified small businesses. This protection would apply to taxable years beginning after the enactment of the Act.
Expected Effects
The bill's enactment would prevent small businesses from facing higher unemployment insurance costs in states that have taken federal loans to cover unemployment benefits. This could help these businesses maintain financial stability and potentially avoid layoffs. The change would be implemented for taxable years starting after the bill's enactment.
Potential Benefits
- Reduced Financial Burden: Small businesses in states with unrepaid federal advances would avoid increased unemployment insurance premiums.
- Job Preservation: By alleviating financial pressure, the bill could help small businesses retain employees.
- Economic Stability: Supporting small businesses contributes to overall economic stability and growth.
- Simplified Tax Compliance: Small businesses would not have to deal with the complexities of increased premiums related to state advances.
- Encourages Entrepreneurship: Reduces the risk for small business owners.
Potential Disadvantages
- Potential Strain on Federal Resources: The federal government would forgo revenue from the usual reduction in tax credits.
- Possible State Disincentive: States might be less incentivized to repay federal advances quickly if their small businesses are shielded from the consequences.
- Complexity in Implementation: Defining and identifying "specified small businesses" could create administrative challenges.
- Unfairness to Larger Businesses: Businesses with 500 or more employees would not receive the same protection, potentially creating a competitive disadvantage.
- Potential for Abuse: Businesses might try to artificially reduce their employee count to fall under the 500-employee threshold.
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble), as it aims to promote economic stability and protect small businesses. Congress has the power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8, Clause 1). This bill falls under Congress's authority to regulate taxation and provide economic relief.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).