U.S. House approves small business tax relief

WASHINGTON, June 15 Tue Jun 15, 2010 7:54pm EDT

WASHINGTON, June 15 (Reuters) - The U.S. House of Representatives on Tuesday approved a package of small business tax relief that backers hope will help create new jobs.

The bill, which would eliminate capital gains taxes on investments in small businesses, passed on a vote of 247-170.

It is a companion bill to legislation backed by President Barack Obama that the House is to consider on Wednesday. That bill would create a $30 billion fund to encourage community banks to lend to small businesses.

"Small businesses need capital to create jobs and lead our economic recovery and these bills contain important tax cuts and lending opportunities that will help give small business owners the resources and flexibility they need to help their businesses grow," said House Ways and Means Committee Chairman Sander Levin.

The bill gives small businesses a bigger tax break on start up costs and creates a program to help small businesses struggling to repay loans.

The $3.5 billion in tax breaks would be offset in part by changes in rules for grantor retained annuity trusts and by tightening rules on $1.01 per gallon tax credit on the production of biofuels from cellulosic feedstocks.

The bill would make highly corrosive fuels such as crude tall oil, created as a waste product from paper manufacturing, ineligible for the tax credit.

The bill is to be joined with the legislation on small business lending before the package is sent to the Senate for its consideration. (Reporting by Donna Smith; Editing by Chris Wilson)