WASHINGTON, D.C. — The Small Business Jobs Act cleared the U.S. House last Thursday on a 237-187 vote after passing the Senate earlier in the week. President Barack Obama plans to sign the $30 billion package of incentives and tax cuts into law today.
“Helping small businesses helps get Americans back to work,” says Max Baucus (D-Mont.), chairman of the Senate’s Finance Committee. “This bill creates the right conditions, right now, to help small businesses create jobs by spurring investment and entrepreneurship with tax cuts and improved access to capital.”
The Small Business Jobs Act will provide new tax breaks targeted to small businesses, increase Small Business Administration (SBA) lending limits, waive SBA loan fees, and give community banks $30 billion in new capital to ease lending. In addition, the Act will allow the deduction of the full cost of equipment purchases made in 2010 and 2011 up to $500,000.
The Small Business Jobs Act does the following:
- Creates a targeted $30 billion Small Business Lending Fund to provide community banks with capital to increase small business lending, and offers $1.5 billion in grants to support $15 billion in new lending through state programs;
- Incentivizes outside investment by offering a 100% exclusion from capital-gains taxes on small-business investments;
- Reduces the tax burden for small businesses by allowing them to “carry back” general business tax credits to offset taxes from the previous five years, and allows businesses to count general credits against the Alternative Minimum Tax (AMT) liability, freeing up capital;
- Increases Small Business Administration (SBA) loan limits, improves access to SBA loans and lowers the costs involved in getting them;
- Increases Section 179 expensing, allowing deduction of the full cost of capital investments up to $500,000, and extends Bonus Depreciation provisions of the tax code to permit a write-off of 50% of the cost of new equipment;
- Increases a tax deduction for start-up expenditures to $10,000, double current levels;
- Creates tools to help small businesses export goods, including the State Export Promotion Grant Program (STEP);
- Allows self-employed individuals to deduct health-insurance costs to help pay self-employment taxes; and
- Improves competitiveness in federal contracting by ensuring that no program receives priority over another in the bid process.
The vote split mostly along party lines, with House Republicans deriding the bill as “TARP Jr.,” after the $700 billion bailout President Bush helped pass in 2008. Most small-business groups support the legislation, occasionally expressing reservations that it may not go far enough in its efforts to boost lending.