Small Business Mole|

Small-business groups had rallied for an economic-stimulus plan packed with generous new tax breaks and other relief measures making it easier for businesses to grow and hire employees in this tough economy. Well, they aren’t too pleased with the outcome.

“There’s not a lot in the stimulus plan that will put cash in the hands of people who will deliver it to the front door in the form of sales,” William Dunkelberg, chief economist with the National Federation of Independent Business, told the AP. Rather, he and others said the compromise plan finalized yesterday seems to focus on padding consumers’ pockets, with the assumption that the money will eventually trickle down to businesses.

NFIB and other small-business advocacy groups had pushed for measures such as a six-month payroll tax holiday, doubling the tax deduction for start-up companies to $10,000 from the current $5,000, and exempting an entrepreneur’s first $30,000 in net earnings from tax. While it’s still unclear what will be in the final compromise, it seems the business-focused measures were limited to ones that many business owners felt were less-than-adequate, including extending loss carrybacks to five years (now limited to just small businesses) and and continuing an expansion of Section 179 deductions to $250,000 on purchases of equipment such as computers, furniture, machinery and vehicles.

What’s more, some groups fear the compromise stacks extra, new burdens onto entrepreneurs that will make life harder than before. The Small Business and Entrepreneurship Council yesterday sent out a last-minute plea to strip the bill of the “Buy American” provision that will force the government to purchase all material goods used for public-works projects – claiming the international backlash created by such a measure will hurt small exporters. That provision was softened in the final compromise to say that the U.S. must comply with World Trade Organization rules, but critics still think it will have negative repercussions. The group also asked Congress to remove new rules that would force businesses to extend health insurance to laid-off workers with 10 years of service, and to get rid of verification and wage rules it says will make it difficult for small businesses to vie for government contracts.

“I think we clearly need a different type of package,” Raymond Keating, chief economist for the Small Business and Entrepreneurship Council, told the AP. “We need incentives in the private sector for people to take risks and expand business. Unfortunately, there’s very little of that in this package.”

This article was posted on the following website: http://blogs.wsj.com/independentstreet/2009/02/12/small-business-groups-critical-of-stimulus-plan/. There is a comment blog there so if you have any comments we encourage you to visit the site and make a comment.

Our feeling is that if the credit market loosens, investor confidence in the banking system improves,  things will get a lot better for small businesses like ours hopefully this year. No doubt that we are all getting a red rash out of having to bail out big banks and wall street but I’m willing to swallow a little sour milk for the honey later. Sure hope we get some of that honey soon.

The Business Mole