Community bankers urge action on a slew of tax breaks

The letter went to House Speaker Nancy Pelosi (D-Calif.), Minority Leader John Boehner (R-Ohio), Ways and Means Committee Chairman Sandy Levin (D-Mich.) and panel ranking member Dave Camp (R-Mich.).

The extension of income-tax rates would help small businesses, including about 2,300 community banks that are considered Subchapter S corporations and taxed at the individual income tax level. 

“During this difficult economic period, at a minimum, the current top tax rate of 35% should be preserved for both small business Subchapter S income and C corporation income,” the letter says. 

Community bankers also pushed for the extension of capital gains and dividend tax rates because “many community banks continue to seek additional private capital in a difficult capital market environment to expand their lending and the credit flowing in our economy.”

The biodiesel credit would support additional jobs, and specific estate tax policy would provide small businesses and family farms a sense of “certainty in their estate tax planning.”  

The “extremely punitive estate tax levels that will become effective starting Jan. 1” must be addressed in the lame-duck session, the letter said.  

The letter requested the extension of several other tax breaks, including: 

• Five-year NOL carryback — allowing community banks and small businesses with $15 billion in assets or less to spread out their current losses with a five-year carryback allowed through 2011. 

• Tax-exempt eligibility for loans guaranteed by the Federal Home Loan Banks — helping start greater lending and allow state and local governments to obtain continued financing for projects at lower cost.

• $30 million annual issuance limit for tax-exempt qualified small-issuer bonds used extensively by community banks — to allow community banks to continue financing local projects such as schools and hospital construction with more reasonable financing costs.

• New Markets Tax Credit incentives. 

• Build America Bonds program — supporting greater job-creating state and local infrastructure financing through the program.

• Small Business Administration loan program incentives — holding the lower fees for SBA borrowers and the higher 90 percent guaranty on SBA loans has allowed community banks to double their SBA small-business lending over the past year. To date, these incentives have spurred $30 billion in lending and more than 65,000 small-business loans.