Mentioning “small business” at least 13 times in his speech (get the full text here), the president unveiled a two-pronged attack to get America’s “true engine of job creation” back on its feet and hiring again. Obama pledged to redistribute $30 billion in repaid bailout money from big banks to smaller community banks “to give small businesses the credit they need to stay afloat.” He also promised to eliminate all capital gains taxes on small business investment, to give tax breaks for small businesses who raise wages or hire more workers, and for those who invest in new plants and equipment.
Nydia Velazquez, the chairwoman of the House Committee on Small Business, said the president clarified the “central role small businesses play in our economy,” and added the tax initiatives “would spark growth by helping firms reinvest in their facilities.”
Washington, DC-based tax policy expert Clint Stretch, of Deloitte Tax LLP, said the president’s tax incentives would address the “cashflow issues” facing small businesses and added the tax credit on the purchase of new equipment is especially significant for companies looking to expand as the economy recovers. “If you’re looking at a recovery, you’re going to want to start updating your equipment or start bringing in new equipment in as you hire workers back. The quicker they can write it off for tax, the quicker Uncle Sam is picking up the bill.”
Stretch said Obama is on the right track by combining tax breaks with a program to increase small business lending.”At the end of the day if I’m going to go out and buy $250,000 worth of equipment for my little factory, the fact that the government is going to allow me to write most of that off so that I’m going to save 35 cents on the dollar, I’ve still got to finance the other piece.”