For small businesses, the good and the bad of government programs

Monday, September 6, 2010

More than a dozen programs aimed at spurring hiring among small businesses have been introduced or proposed. They include:

-- Under the Recovery Act, the government raised the maximum guarantee for Small Business Administration loans and temporarily suspended fees charged to business owners. Money in that program ran out in the spring and the Obama administration is pressing Congress to approve an extension.

-- As part of the new HIRE Act, business owners get a tax cut on their share of payroll taxes for hiring unemployed people. They get another cut if they keep the employees for a year.

-- The administration is proposing to eliminate all capital gains taxes on small-business investments as well as to extend provisions allowing them to deduct the cost of capital expenditures and write off certain investments.


Some small-business advocates consider several government actions and initiatives to be obstacles to growth and hiring. They include:

-- Capital gains and dividend tax cuts are scheduled to expire at the end of the year, returning to a 20 percent maximum rate from the current 15 percent.

-- Tax cuts for top-bracket income earners making at least $250,000 are scheduled to expire at the end of the year. This will adversely affect owners of S corporations, who report their business income on their personal tax returns.

-- A provision in the health-care overhaul law, aimed at weeding out income-tax cheats, will require businesses in 2012 to file a 1099 form for all vendors supplying them at least $600 of goods and services. Previously, businesses had to fill out the form only for independent contractors with whom they spent at least $600.

-- V. Dion Haynes

© 2010 The Washington Post Company