Taxes & Small Business

This is from the Wall Street Journal.

The Obama administration has targeted small business with laser-like focus, pushing a $30 billion small-business lending fund in Congress and, later this week, rolling out a tax break allowing businesses to deduct 100% of qualified capital investments.

But the chief economist at the National Federation of Independent Businesses said today that small business doesn’t need more tax relief. Instead, he said, Washington should aim its firepower at consumers so they begin spending money and creating demand for the products and services small companies provide.

“If you give a small business guy $20,000 he’ll say, ‘I could buy a new delivery truck but I have nobody to deliver to,’” said William Dunkelberg, chief economist for NFIB.

Rather than aim more tax relief at business, Dunkelberg said Washington should extend the Bush-era tax cuts for everyone – including those making above $250,000.

“History shows that letting Washington have the money and spend it is very ineffective,” he said.

The administration’s latest idea, which would allow businesses to temporarily deduct 100% of “qualified” capital investments, can help “on the margin,” Dunkelberg said. With capital-spending by small business at a 35-year low, some firms will naturally take advantage of a temporary tax incentive to replace products. But Dunkelberg said he thinks most small businesses will hold on to their cash until more certain economic times

The best way to help, he said, is to “finally address the most important person in the economy – the consumer.”