Will the American Jobs Act Help Your Small Business Grow?
Anything that goes on in Washington is controversial these days, and nothing more so than the President’s proposed jobs bill, the American Jobs act. Because it has become axiomatic that small business is the engine of jobs growth in this country, you won’t be surprised to find the proposed legislation contains a number of provisions directly aimed at promoting small business hiring directly—through tax incentives—and indirectly—through other tax cuts, incentives and measures meant to streamline the bureaucracy. Here’s a brief rundown of the measures that could positively affect your small business.
New tax cuts are designed to support hiring and investment.
The President is proposing three tax cuts to provide immediate incentives to hire and invest:
- Cutting the Payroll Tax in Half for the First $5 Million in Wages: This provision would cut the payroll tax in half to 3.1% for employers on the first $5 million in wages, providing broad tax relief to all businesses but targeting it to the 98% of firms with wages below this level.
- Temporarily Eliminating Employer Payroll Taxes on Wages for New Workers or Raises for Existing Workers: The President is proposing a full holiday on the 6.2% payroll tax firms pay for any growth in their payroll up to $50 million above the prior year, whether driven by new hires, increased wages or both. This is the kind of job creation measure that CBO has called the most effective of all tax cuts in supporting employment.
- Extending 100% Expensing into 2012: The President is proposing to extend 100 percent expensing, the largest temporary investment incentive in history, allowing all firms – large and small – to take an immediate deduction on investments in new plants and equipment.
Other measures are meant to help entrepreneurs and small businesses access capital and grow.
The President’s plan also includes administrative, regulatory and legislative measures—including those developed and recommended by the President’s Jobs Council —to help Americans start small firms and expand them. This includes changing the way the government does business with small firms.
- The Administration will soon announce a plan to accelerate government payments to small contractors to help put money in their hands faster.
- The President is also charging his CIO and CTO to, within 90 days, stand up a one-stop, online portal for small businesses to easily access government services.