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Congress picks party first, small businesses second

Posted by Jason Keith  July 19, 2012 08:30 AM

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In case you missed the grand theater this week, small businesses (as a group) were caught in the political crossfire.

Everyone in government, from President Obama on down, claims that they want to do everything they can to help small business growth and employment. We've heard everything from their taxes should be cut, their burdens lessened, access to credit increased and incentives for hiring passed immediately to spur action. The problem is that members of both the House and Senate don't seem to have any interest in really helping small businesses, just talking about how they want to help small businesses. In this case, non-action is speaking a lot louder than words.

Last week, the Senate killed three measures that were aimed at helping small businesses. They included:

  • A $46 billion measure that would have granted businesses with fewer than 500 employees a one-year 20 percent tax break. By some estimates this would have created just under 200,000 jobs.

  • A $4 billion measure that would have encouraged more start-ups

  • A provision to give businesses a 10 percent tax break worth up to $500,000 for any new payroll added this year. It also would have extended a 100 percent bonus depreciation, allowing companies to write off investments in expansions and new equipment. Estimates cited this would create nearly 1 million jobs.

The amazing part is the bill wasn't killed because it didn't have smart solutions - in fact it had already passed the Republican controlled House of Representatives - it was voted down because as part of the bill, Congress couldn't figure out a way to extend or expire the now famous "Bush era tax cuts." At issue is the threshold for those tax cuts. Democrats want them extended for everyone making less than $250,000, while Republicans want them extended for everyone. And in the middle are small business owners that may or may not be affected. Depending on who you believe, taxing those making over $250,000 will be a death knell for the small business economy, or it will have a minimal impact on small businesses (2%) because the majority don't make that much in a year. According to a recent study done by Ernst and Young, taxing the plus $250K group would mean 2.1 million business owners would have higher tax rates (specifically LLCs and S-Corporations) and cost an estimated $200 billion in economic output and 710,000 jobs. Tomorrow there will be a study saying the exact opposite I'm sure.

So because of a completely different issue, small business legislation that could have helped the group everyone claims to want to prop up was left for dead.

After the bill was effectively shot down, both sides started to point the finger. The argument from Democrats was that Republicans will do anything to keep President Obama from succeeding. Republicans argued that the vote was political posturing, with Democrats blocking amendments to the bill and not wanting to engage in a serious debate about tax cuts that could help the economy.

At the end of the day, the people that suffer the most are the ones members of Congress claim they are pulling for: small business owners. Despite what size they are, how many people they employ or how much money they are making, small businesses as a group need simple things to succeed: less red tape, more access to capital, incentives to hire and simple tools to attract and retain talent. The truth is there will never be a bill that is perfect and doesn't have portions that make one political party unhappy. So small businesses, the ones that Washington claims are the backbone of the U.S. economy, has to take a back seat to political bickering and grandstanding - on both sides of the aisle.

Does Congress really have the best interests of small businesses in mind, or their own?


This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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About this blog

Jason Keith has been working for and with small businesses in the New England area for more than 10 years, specifically small, micro businesses. Born and raised in Massachusetts and a former journalist, he provides a unique perspective on the issues facing small businesses locally and nationally.To reach him directly email

This is a personal blog. The opinions expressed here are the author's alone.

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