Santa or Grinch and small business lending craters

Republicans in the U.S. House decide to be either Santa or the Grinch this holiday season when they vote later today on whether to agree with the Senate’s bipartisan plan to extend payroll tax cuts and unemployment benefits for two months.

This is a big deal for small businesses.  If working Americans see less money in their paychecks in January, spending on Main Street will slow down.  That might be good for the GOP’s ambition to win back the White House but it will be a disaster for small businesses. 

Don’t be fooled by Speaker Boehner’s concerns over “certainty” for “job creators” and the unemployed.  Small businesses want this payroll tax cut to continue whether it is for two months or 12.  The same goes for continuing unemployment benefits because that’s money being spent on Main Street.

What we don’t need is more partisan politics in Washington making life even more difficult for us.  The House should pass the Senate plan and fight about it again next February.  During the interim, our Congressional folks ought to go back home and see how the latest bank lending news is negatively affecting small business. 

New federal data show that the number of small bank loans to business has fallen to the lowest point in more than a decade, cutting the flow of money to a sector that's usually a job-creation powerhouse…. An analysis of recently released Federal Deposit Insurance Corp. data by the Investigative Reporting Workshop shows that overall commercial and industrial lending by banks has increased for five straight quarters, but small loans to business of $1 million or less have been shrinking consistently since June 2008.

But fixing the small business lending problem is difficult.  Our GOP friends in the House apparently prefer to do what is easy…create partisan gridlock regardless of the pain to small business it yields.

Let upper-end Bush-era tax cuts expire

By Frank Knapp, Jr.
The Hill's Congress Blog
September 21, 2011

 

President Obama’s call for cutting the deficit by $3 trillion includes the roll back of the Bush-era tax cuts on the top income tax brackets, a move expected to bring in about $800 billion over the next 10 years.

As expected the defenders of the wealthiest two percent of taxpayers, such as Speaker John Boehner, trotted out their bogus criticism of the proposal saying that it hurts small businesses, the “job creators”.

First, the data clearly shows that only 2 to 3 percent of tax filers reporting some income from a small business have family incomes of over $250,000 a year, the filers who would be impacted by the proposal. This minority of “small business owners” consists largely of very successful attorney’s, physicians, hedge fund managers, K Street lobbyists, high-powered consultants, Wall Street bond traders and the country’s wealthiest millionaires.  An incremental tax increase on these Americans will not affect the number of employees they hire one bit.

But while the critics of President Obama’s plan are disingenuous as to who it would impact, at least they continue to remind the public that most net new jobs are in fact created by small business.  Now if they would only support proposals that directly target small business for assistance.

When the President announced his jobs plan earlier this month, my reaction was, “Finally, a jobs plan that actually helps the largest jobs-producing sector to create jobs—small business.”

It was not just another trickle-down proposal for job growth.  The American Jobs Act would infuse money into Main Street by putting more dollars in the hands of consumers, cut payroll costs for small businesses to help their bottom line and reward small business with tax credits for hiring the unemployed especially veterans.

Tax credits for small businesses creating jobs is a particularly sound government policy.  It’s not a tax cut for big business and cross your fingers that they will hire.  It’s a tax credit that a small business gets only if it hires a new employee under specific conditions.  No hiring, no expenditure of government funds.  This is a common sense job creation proposal.



Unfortunately, Mr. Boehner did not endorse any of these proposals to help small business in his subsequent speech at the Economic Club of Washington. In fact, Mr. Boehner disparaged the proposed job tax credits for small businesses saying that this would make reforming the “tax code more complex”.

It is time for Congress to put actions behind their loving praise for small business and quit holding us up as a shield to protect the wealthiest individuals and corporations.

Hands-on small business owners are not Lloyd Blankfein of Goldman Sachs who received $800,000 last year due to the upper-end Bush-era tax cuts; or Rex Tillerson of Exxon Mobil who netted $1.454 million in 2010 because of the tax cuts; or Rupert Murdoch of News Corporation who saved $1.2 million last year from the controversial tax cuts.

The CEO’s of the biggest multinational corporations are just some of this country’s wealthiest people who the President is asking to sacrifice just a little more so that the small business owners of the local retail shops, plumbing companies and restaurants can have more customers and create more jobs.


Mr. Knapp is the President and CEO of The South Carolina Small Business Chamber of Commerce.

Source:

http://thehill.com/blogs/congress-blog/labor/182961-let-upper-end-bush-era-tax-cuts-expire

Don't talk about it....do it

Last night we heard from President Obama and Speaker Boehner about their ideas for addressing deficit reduction and raising the debt ceiling. The President spoke about the need to close corporate tax loopholes and end offshore tax haven abuse—issues that you have heard me talk about many times.

Unfortunately, neither deficit reduction plan on the table from Democrats or Republicans addresses the crucial problem of U.S.-based multinational companies avoiding paying taxes.

This afternoon I took part in a conference call media briefing with Texas Congressman Lloyd Doggett who is introducing his “Stop Tax Haven Abuse Act” in the House today. Two weeks ago I was in DC doing the same thing in person with Michigan Senator Carl Levin.

Below are the remarks I made today.  Click here to hear the audio from the media briefing.
------------------------------------------------------------------------------------------------------------

I’m Frank Knapp, president, CEO and co-founder, of the South Carolina Small Business Chamber of Commerce. I am also speaking on behalf of the national coalition, Business and Investors Against Tax Haven Abuse (www.businessagainsttaxhavens.org).

Last week I received a call from a reporter from The Hill and he wanted to know what the Administration and Congress could do to really help small businesses.

I told him that the number one thing that Washington can do is to help create more consumers. But instead of putting more money into our state and local economies that will create jobs and thus more customers for the goods and services of small businesses, today we are discussing cutting the federal budget which will take more money away from Main Street.

It is my understanding that both the Republican and Democratic deficit reduction plans call for $1.2 trillion in discretionary spending cuts over the next decade. Fortunately the Democratic plan doesn’t touch Medicare, Medicaid and Social Security—programs that pump money directly into our local economies and thus help our small businesses.

But both plans fail to pick the low hanging fruit of an estimated $1 trillion that could be used to reduce the deficit without cutting any non-defense discretionary spending which has already been cut.  I’m talking about corporate tax loopholes and overseas tax havens used by U.S.-based multinational corporations to avoid paying taxes. The President talked about the need to address this problem last night, but putting words into action at this time is not on the table.

We’re talking about $1 trillion of taxes not being collected to help pay for our national defense, infrastructure, courts and education system. That means that small businesses and individual taxpayers pay more taxes to subsidize these giant corporations that depend on these government services. This unfair situation has small businesses and all Americans angry and demanding change.

In addition, multinational corporations not paying their fair share of taxes gives them an unfair competitive advantage over our small businesses because we pay our taxes.

Both political parties need to wake up and start listening to Representative Lloyd Doggett and Senator Carl Levin about what is vital in a deficit reduction plan—tax reform that makes multinational corporations pay their taxes.

It's time to close the tax loopholes and tax havens that deprive us of much needed revenue and reward big corporations for hiding profits and exporting jobs that we all know American workers and our economy need now more than ever.