Posted By admin on February 1, 2010

President Obama today released his $3.8 trillion FY11 federal budget proposal with $17 billion in Small Business Administration 7(a) loan guarantees to help business owners increase access to capital.

We will continue, for example, to do what it takes to create jobs.  That’s reflected in my budget; it’s essential,” Obama said in a released statement

The president’s budget package includes $53 billion in tax cuts and $50 billion job-creating measures. Among them are small-business tax cuts, green technology investments and transportation infrastructure programs. It also includes $30 billion in incentives for small businesses that hire new workers or increase wages.

The Obama administration is seeking an increase in the 7(a) loan guarantees to $5 million, up from $2 million in FY10.

The administration is also proposing to allow companies to immediately deduct 50 percent of their qualifying investments, another aspect of his job creation plan. The budget proposal would also allow small businesses to write off up to $250,000 of qualified investments in 2008 and 2009, a provision that would cut taxes by more than $1 billion in 2009 and 2010.

And perhaps one of the most key provisions in the administration’s plan is to permanently eliminate small business capital gains by excluding from taxation 75 percent of the capital gains for investors in small businesses who hold their investments for five years. This provision will save small business owners nearly $1 billion over 10 years. The president’s budget proposes to completely eliminate the capital gains tax on small business stock.

There’s a one-year extension of the Making Work Pay tax breaks, originally delivered as a part of last year’s stimulus package, that will cost $22 billion. The credit resulted in slightly higher paychecks for 110 million families, according to the White House. The budget would make permanent tax cuts passed during the Bush administration for all except high-income households making more than $250,000 a year.

But not everyone is convinced that the White House budget proposal will be good for business.

Senate Minority Leader Mitch McConnell, R-Ky., told CNN on Sunday that Obama’s budget would raise taxes, especially for some small business owners. “If you’re a small business and pay taxes as an individual taxpayer, your taxes are going up,” McConnell said. “So is that a great environment in which to expand employment? I think the answer is no.”

The debate has just begun.

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