Small businesses are struggling during these tough times, and are looking to lawmakers for smart policies that will help boost the economy. In addition to specific legislation aimed at helping small employers, such as the Jobs and Credit Act and healthcare reform, small firms need legislation focused on helping the majority of Americans, who make up small business owners’ customer base. The compromise tax package passed by Congress and signed into law by the president last week aims to do just that, which is good news for small businesses and the American people. It also allows us to move on to other pressing issues affecting small businesses.
Like most compromises, though, the deal was not perfect. Part of the compromise included extending tax cuts for the upper income brackets—those with taxable incomes of $250,000 or more—and a debate raged about whether this would have an adverse effect on small businesses. The claim that small businesses would be hurt if taxes on the top earners increased is misguided. Fewer than 3% of small business owners earn more than $250,000 a year, and the bulk of small employers across the country wouldn’t benefit from tax breaks on the rich.
Despite the disagreement, however, there are numerous provisions in the package that are valuable to small businesses in this fragile economy. Take, for example, the extension of research and development tax credits. This critical component will incentivize and reward companies that create new technologies and keep jobs here at home. Perhaps most important, the two year payroll tax reduction, coupled with the extension of unemployment benefits and middle class tax cuts, will put more money into the hands of American consumers, which in the end boosts small businesses’ bottom lines.
Small businesses are the lifeblood of our economy. Bipartisan measures like the tax cut package will help small businesses weather this economic storm and increase both revenues and job creation.