With an estimated cost of $ 7 billion over 10 years, Congress has passed a package of small business stimulus measures. This should be able to spur lending, increase tax cuts, and provide new equity financing. This bill is in response to the increasing costs of beginning a business, and will be overseen by the Treasury’s inspector general.
Small business bill cuts taxes
The small business bill is a combined bill that closes a whole bunch of tax loopholes and renews tax cuts for small businesses. There would be $ 3.6 billion in tax breaks for any small businesses to be implemented over the next decade. The tax breaks can be paid for by increases in tax for large businesses. Startup expenditures for a small business could be deducted from their taxes. This provision of the bill started as a separate measure that was in Congress, but is being combined as it is sent to the Senate.
Extra money to flow to small businesses
The small business lending bill probably could create 3 major avenues for small businesses to get money. First, there would be a $ 30 billion fund of “preferred stock” that banks would be allowed to tap depending on their lending to farms and all of the small businesses. There would also be $ 2 billion given to states to help increase state-funded loans to numerous different small businesses. Third, the Small Business Administration would be authorized to match $ 1 billion of private investment in startups.
Paying for the small business bill
In order to pay for the estimated $ 7 billion cost of the small loan for businesses bill, the government will have to increase some taxes. Specifically, tax breaks for Grantor-Retained Annuity Trusts – which are actually trusts set up to avoid taxes on gifts — will be rescinded. Also, there could be taxes on the sale of some stock that would be increased to the point of standard income taxes as opposed to capital gains taxes.
Small business bill voting
The small business bill has passed the house on a 241-182 vote. The bill is now being combined with the $ 3.6 billion tax-cut bill that is for small businesses and will go to the Senate. The bill is expected to pass within the Senate. Some Senate Republicans are arguing that this bill is really “another bank bailout” in disguise as a small business stimulus package. Democrats counter that the bill takes an very balanced approach to traditional and non-traditional lending for new businesses.