President George W. Bush met with congressional leaders from both parties on Tuesday, Jan. 22 to discuss the upcoming economic stimulus package expected to be rolled out later this month. In general remarks made by the President on Jan. 18, he set out broad principles to guide the discussion between the administration and Congress.
During his comments, Bush indicated that the package should be about one percent of the Gross Domestic Product (GDP) or about $140 billion including both tax incentives for business and rapid income tax relief for American people, including small business owners. While avoiding making specific proposals for the stimulus package, Bush did say that it must be temporary and not include any tax increases.
A key piece of any effective growth package is the inclusion of tax incentives for small businesses. Charged with creating 60 to 80 percent of all net new jobs, small-business owners carry significant responsibility for economic growth on their shoulders. It is crucial that, in any economic slowdown, small business is taken into account. NSBA urges Congress and the President to include the following provisions in the economic stimulus package:
R&D Tax Credit
While this incentive expired on Dec. 31, 2007, it is an important tool that remains critical for innovation, productivity and competitiveness. NSBA believes that R&D tax provisions spur economic growth and should be made permanent.
Small Business Section 179 Expensing
Increasing the amount of expensing levels that small business can immediately write off has made a critical difference in capital investment for equipment and other purchases. NSBA believes Section 179 expensing benefits the U.S. economy and our global competitiveness.
Allows for businesses to invest in their companies and enables them to deduct 50 percent of business investments made this year. In order to reduce the cost of capital assets and property, NSBA supports restoring the bonus depreciation write-off as it provides a powerful incentive for business owners.
Net Operating Loss Carry Back
This deduction allows business owners to offset one year's losses against another year's income. NSBA supports extending the NOL carry back provisions because it will provide additional money for further investment and job creation.
Similar to the NSBA suggestions, Republican Minority Whip Eric Cantor (R-Va.) introduced a proposal, the Middle Class Job Protection Act (H.R. 4995), for small business tax cuts, which he hopes will be included in the anticipated stimulus package. H.R. 4995 is aimed at helping to ensure continued expansion of our economy and further job creation for American families.
Cantorís legislation would cut the corporate tax rate from 35 percent to 25 percent, provide for a 50 percent bonus depreciation through 2009, and increase Section 179 expensing limits to $250,000 for purchases of machines and equipment worth up to $1 million for 2008 and 2009. H.R. 4995 also would allow a 5-year carry back of Net Operating Loss and an extension of the carry back period for business tax credits for 3 years.
NSBA will work to ensure that an effective stimulus package includes incentives for small businesses to invest now in order to expand their operations, create new jobs and inject new energy into the economy.