As the bill makes its way through Congress, one entrepreneur argues that small business owners won't get much out of it
Figuring out what owners of small businesses want from the stimulus plan isn't rocket science. We're really not about government handouts. We want stability and predictability. We want lower taxes over the long term. We could always use some help generating demand for our products and services. We want less bureaucracy, too. Unfortunately, the plan doesn't really address any of this.
To start, the tax incentives being proposed aren't long-term. I'm sure they're very helpful to some companies that need the assistance. But they're essentially Band-Aids. Letting us "carry back" our losses five years instead of two is nice for those of us who had losses. But here's a shock: Many of us don't lose money. Yes, we might make less money this year. But that doesn't make us eligible to benefit from the proposed five-year carryback. And some of the people who lost money are being given this lifeline to help them extend their company death watch a few more years instead of letting nature take its course. We don't need our competitors, unprofitable and badly run, to get help from the government so they can continue to be a pain in our necks.
The tax cuts for individuals, estimated at about $500 per person, don't do much to excite us, either. Like the rebate checks mailed out earlier in 2008, an extra ten bucks a week in people's pockets isn't going to have much of an impact on our businesses.
Also on the table is a one-year credit for hiring new workers. No business owner I know is going to hire a new worker because there's a tax credit available. We hire people because we need them. A tax credit is just giving money to people as an incentive to do something they would be doing anyway. We'd prefer an inflation-adjusted, permanent tax credit to offset some of our health insurance premiums so that we can keep our overhead under control and navigate our way through this recession.
We do like the idea of expanding Section 179, the rule that lets businesses write off equipment as deductions in their first year. It definitely encourages investment. But this is not a new rule. Last year's deduction was $250,000. It was supposed to go down, but the stimulus plan will keep the number the same. Make it permanent. That way we can plan our investments over the next few years.
Helping Uncle Sam
Of course, the stimulus plan isn't all about taxes. There's money that will be spent, too. Billions are being earmarked to improve the country's infrastructure, roads, and electrical grids. We're good with that. We'd like to see most of this money going out to businesses that in turn will need support from other businesses. But we're worried much of the cash will be spent to inflate the government's payroll.
The proposed deficits are freaking us out, too. We'd never be able to undertake this kind of investment in our own business. No bank would fund the kind of shortfall that's being proposed. It goes against our instincts for running a profitable company. On the upside, these investments may pay off and generate enough GDP to provide a good return. But on the downside, we may find ourselves beholden to China or facing 20 percent inflation as the government is forced to print enough money to pay off our obligations. I don't know many business owners who would take that kind of bet.
But here's the big thing: We don't care about all this as much as some may think. We're not that bothered about the stimulus plan. Really. We're not going crazy about the stock market, and we're smart enough to understand that Microsoft (MSFT), even with its 5,000-person layoff, still earned four billion dollars last quarter. We can sift through the media baloney and know what's real. And what's real is that, no matter what the government does, we'll adapt and figure out a way to make a buck.