Will Government Initiatives Save Small Business?

It’s an old math problem:  If the U.S. needs to create more jobs to spur the economy, and small business historically generates 60% to 80% of all new jobs, then how much government money should be used to support small business?  You do the math . . .

In a hearing before the House Small Business Committee on January 14, some of the suggestions for improving the small business climate included:

  1. Increasing from 2.5% to 5% of the amount of federal funding allocated for Small Business Innovation and Research grants;
  2. Making more money available for small business development counselors;
  3. Creating an exemption of the first $30,000 of net earnings from self employment from the self-employment tax;
  4. Creating a 20% tax credit for employers who contribute to health care coverage;
  5. Increasing the SBA loan program guarantee to 95% of the loan and reducing lender and borrower fees for loans up to $500,000;
  6. Repealing the 3% withholding tax on government payments to contractors set to start in 2011; and
  7. Increasing the net operating loss carryback period to five years (up from the standard two years) - (this looks likely to be included in the stimulus package).
Certainly implementing all of these suggestions would help the small business climate.  Even more important may be the need for government to get out of the way of small business; stop making it hard to do business by imposing so many regulations, tax costs, and other impediments to innovation and growth.

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