Throughout much of his tenure, President Obama been lending a significant amount of lip service to the idea that America should be investing in its small businesses.
Since the onset of our current economic difficulties, small businesses have disproportionally been suffering from the overall slowdown in consumer spending, leading to less cash flow and poor credit- two factors that have effectively crippled many businesses by limiting their ability to operate effectively and receive necessary financing.
As of late, Obama has been trying to push through legislation meant to provide some relief to small businsses by offering tax credits and other incentives. But the truth is that the new bill is loaded with features that seem more suited to bigger businesses.
The new legislation provides a tax break for companies that make large capital purchases, such as airlines and telecommunications firms. Most small businesses do not usually make such large capital purchases.
The issue of bonus depreciation is more relevant for large or middle-sized firms. Small businesses can already write off 100% of equipment costs up to $250,000. The fact that the Senate bill proposes to increase that limit to $500,000 may help a few small businesses out – but only if their purchases actually reach that level.
That said, the new legislation does contain some tax breaks which are specifically aimed at smaller companies. It sets higher limits for small business expensing, and includes a proposal to grant self-employed individuals tax breaks for health insurance similar to those now received by employees.
The bill would also abolish capital-gains taxes on the sale of certain small business stock. Loan limits of the Small Business Administration would increase, providing $30 billion in loans to community banks for small-business lending.