Senate plan will provide tax incentives to encourage investments by employers.
Senator John Kerry (D- Mass.) this week proposed a Senate economic stimulus package that would target tax incentives for small businesses, reduce fees on loans and double funding for microloans.
The proposed bill will increase the amount small businesses can write off on their taxes for new investments for 2008 from $125,000 to $200,000. The bill will also increase the net operating carry back period for losses arising in taxable years ending in 2007 and 2008 from two to five years.
The bill will also provide more funding to leverage nearly $20 million in microloans.
Kerry said in the coming years federally backed loans will be increasingly important to spurring economic lending in the small-business sector so entrepreneurs will not have to use high-interest credit cards to finance their businesses.
"Small businesses already employ more than half of our country's workforce, so we need to make sure that entrepreneurs have money in their pockets to continue to grow their businesses," Kerry said.
Raymond Keating, the chief economist of the Small Business and Entrepreneurial Council, a Washington-based advocacy group, said temporary tax rebates would fail to provide sufficient incentives for owners to re-invest in their businesses. Instead of a one-time economic stimulus package, the group supports the Economic Growth Act of 2008, which Keating said, "would increase investment by allowing all businesses to immediately expense capital expenditures."
He said the act would make the economy more competitive by lowering corporate income tax and indexing capital gains for inflation.