Small Business Advocates Push for Piece of Stimulus Plan

Lawmakers and lobbying groups with an eye on small business are working to ensure that a new economic stimulus package will include benefits for small firms.

The deal includes provisions that would allow faster tax write-offs for corporate investment and immediate tax deductions for small-business investment in plants and equipment, according to today's front-page story in The Washington Post.

The National Federation of Independent Businesses lauded most parts of the House plan related to small firms, saying that over the past several weeks it had worked with lawmakers and the White House to ensure that small businesses "would be a primary focus."

The lobbying group said one of the proposal's most important provisions would increase the dollar amount for expensing limits, which would allow small-business owners to immediately write off business purchases. It also said the House plan was sound because it included a 50 percent bonus depreciation deduction as an incentive for businesses to invest in businesses now by providing an immediate deduction for half the cost of an investment.

The expensing and bonus depreciation provisions were included in the Middle Class Jobs Protection Act introduced by Rep. Eric Cantor (R-Va.) last week. His office said those measures "give entrepreneurs incentives to expand and purchase equipment and will help spur job creation and wage appreciation."

NFIB criticized the economic stimulus plan for failing to include expansion of the net operating loss carry-back provision from two years to five years. The group explained that lengthening that provision would enable business owners to balance out net losses over years when the business has a net operating gain. Spreading out this tax liability helps a business to decrease the impact of a couple of bad years.

The National Small Business Association is on board with most of what the NFIB is requesting, but is also pushing for a research and development tax credit that expired Dec. 31, 2007 to become permanent - something long sought by technology and science firms.

Many small business groups are clamoring for something recommended this year by an independent adviser to the IRS - some sort of standard home-office deduction.

The Senate now must hammer out its own proposal.

Sen. John Kerry (D-Mass.), who heads up the Small Business and Entrepreneurship Committee, introduced legislation last night that he hopes will be included in the Senate Finance Committee's stimulus plan.

Kerry's bill, S. 2553, would provide tax incentives to small businesses, reduce fees on loans and double funding for microloans and would increase from $125,000 to $200,000 the amount small businesses can write off their taxes for new investments for 2008. The bill also includes what small business groups have been requesting - an increase from two years to five years the net operating carry-back period for losses arising in taxable years 2007 and 2008.

Kerry's measure also would reduce fees on borrowers and lenders to make credit more affordable and provide incentive for lenders to make small business loans. The bill will provide additional funding to leverage about $20 million in microloans. The average microloan is about $13,000, according to the Small Business Administration.

Small Business Blog readers: Do you think lawmakers and others are working in the right direction to boost revenue at small businesses and create a more hospitable economic climate?

By Sharon McLoone |  January 25, 2008; 4:32 AM ET Regulation Legislation
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It is great to see that Small Businesses are getting some press. What needs to happen is small businesses need to organize and become the next AARP. Small Biz are the backbone of the USA economy. Funny how none of the presidential candidates are saying anything about us.

Posted by: Jim Peake | January 25, 2008 7:01 PM

Being able to subtract health insurance for S Corporations when doing taxes would be a nice start.

Posted by: Small Business Owner | January 25, 2008 7:51 PM

As a small business owner I and many others had hoped that the NFIB would be the organization that developed into the type of organization that would represent us as a united voice of SMB's. Unfortunately they seemed to have lost their way. At the point I and many joined there was a passion and movement towards becoming an organization for small and medium size business, now there is a bureaucratic organization that has more lawyers and lobbyists than people with business acumen.

Small business is America; we are the fabric that holds the American economy together. We diffidently need a representation of leaders who are business people who know the issues the members face day in and day out, what it is like to make payroll and be on the hot seat to make a business a success. Let us find an organization like this.

Posted by: Lau Pan | February 18, 2008 7:13 PM

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