Small Business Savior or Stinker?

Posted on September 29, 2010

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According to the Wall Street Journal, one aspect of Obama’s recently proposed stimulus plan “would allow companies to write off 100% of any amount they spend on qualifying equipment in 2010 and 2011.” The hope is that by encouraging businesses to spend more, and spend it soon, retailers from computer companies to large-scale manufacturing vendors will see a boost in sales and revenue.

The proposed write-off also aims to give small business owners greater access to resources and funds. Per The New York Times, “According to the draft description from the administration, the proposal ‘would put nearly $200 billion in the hands of businesses over the next two years – helping companies that make new investments in the United States at a time they need it most.’”

However, many critics remain skeptical of the new legislation. According to the Journal, small businesses that spend less than $800,000/year on equipment can already deduct $250,000 worth of those purchases. These same detractors argue that nervous business owners are hardly likely to spend more than $250,000 on equipment in such uncertain times.

Most recently, the Senate and House passed a bill dubbed a small business bill. According to an earlier article in the Wall Street Journal, the bill increases tax deductions for the self-employed, allows “an immediate write-off of 50% of new equipment purchases in 2010 for small and large businesses” and funnels $30 billion in taxes to banks willing to lend to small businesses.

Regardless of political feelings about these proposals, both sides of the aisle recognize small businesses as vital to economic improvement. As the Journal says, “Both parties agree that renewed hiring by small businesses is crucial to any turnaround in the job market.”

Brice M. Johnston
Johnston Law Firm, P.C.

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