Thursday the Senate passed a multi-billion dollar package of tax breaks and government-backed loans for small businesses. While both parties agree that small businesses are the major job creators in our economy, there was considerable conflict over how to best address the issues.
Among the roadblocks was the $30-billion small-business lending fund to give credit-starved firms access to capital which created insurmountable partisan divisions. Republicans quickly opposed the lending fund as a “mini-TARP” reminiscent of the unpopular Troubled Assets Relief Program.
The bill offers $12 billion in tax breaks to businesses to encourage investment, entrepreneurship and hiring. Businesses also would be able to write off more of their costs of buying equipment or making improvements. Those who are self-employed could deduct healthcare costs from the self-employment tax.
The vote on the small-business measure was 61 to 38, with just two Republicans, George V. Voinovich of Ohio and George LeMieux of Florida, joining Democrats in voting in favor.
Other Republicans said that while the measure had some worthwhile elements, it did not go far enough to reduce the anxiety of business operators.
“Any good in this bill is greatly outweighed by what’s missing,” said Senator Orrin Hatch, Republican of Utah.
The $15-billion cost of the bill is offset by closing tax loopholes and increasing tax-reporting requirements and penalties.
Bill Rys, tax counsel for the National Federation of Independent Business, said in an interview that small businesses have had “some problem” securing loans. Still, he said the group’s surveys have found that businesses are more concerned with poor sales, uncertainty over future tax rates, government regulations and the cost of health insurance.
While an infusion of money may bring some relief, businesses must still deal with the barrage of new government regulations and reporting requirements. The creation of some new jobs may of necessity be in areas that don’t add to the bottom line, leaving businesses short on profits.
