WASHINGTON — Business groups reacted favorably to several tax break proposals President Obama outlined Tuesday to help jump-start small business investment and job creation as part of a broader strategy to stimulate the private sector and staunch massive job losses that have driven the unemployment rate to decades-high levels.
Obama proposed a broad package of stimulus and job measures that focused on deeper tax breaks for small businesses, new spending for infrastructure projects and tax breaks for people who make their homes more energy efficient. The pace of job losses slowed slightly in November and the unemployment rate dipped to 10 percent, but millions of people remain out of work, which continues to depress economic activity.
Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, called Obama’s proposals a “step in the right direction,” but warned the administration and economy “still have a long way to go.”
Burke praised the proposal to provide tax incentives for businesses hiring new employees.
“If you have tax cuts for small businesses that make the hiring decision easier and gets more people off the unemployment rolls, you will see the [unemployment rate] go well below 10 percent,” said Burke. “I believe the White House is moving in the right direction on this.”
Steve Pfister, chief lobbyist and senior vice president for government relations at the National Retail Federation, said, “Zeroing out the capital gains tax for small businesses should provide an incentive. [Obama] also has put forward other provisions that we have supported in the past, such as the bonus depreciation tax incentive and the extension of enhanced expensing.”
Administration officials declined to put a price tag on the package, but said they will pay for the new programs with some of the $200 billion the Treasury Department said it expects to get back in taxpayer-funded bank bailout funds that were not utilized as part of the Troubled Asset Relief Program.
“There are more than seven million fewer Americans with jobs today than when this recession began,” Obama said in a speech at the Brookings Institution. “That’s a staggering figure and one that reflects not only the depths of the hole from which we must ascend, but also a continuing human tragedy.”
A cornerstone of Obama’s proposed package is tax breaks for small businesses, which account for two-thirds of the country’s workforce. Obama pledged to work with Congress to enact several of his proposals.
He called for a one-year elimination of the capital gains tax from new small business investments, tax credits to hire and retain employees, an extension through 2010 of a provision that allows a small business to immediately expense up to $250,000 of qualified investment, an extension of a bonus depreciation tax incentive that accelerates the rate at which businesses can deduct the cost of capital expenditures, and an elimination of fees and increasing guarantees for small businesses that borrow through major Small Business Administration programs.