Obama’s State of the Union speech addressed some the concerns of small business owners Thursday night.
Obama would like to help businesses by diverting TARP funds that have been paid back. The funds would go to community banks. This will help with capital and help small business grow. The White House said that more detail about the 30 billion in capital that will be flowing to community banks, will be announced in the next few weeks. This will most likely be dispersed through the SBA Financing program. In addition to this proposal, Obama will announce on Friday in Maryland, that a tax credit will also be available to firms that hire more employees.
The Small Business Jobs and Wages Tax Cut
This tax credit proposal will help small business hire new employees and increase the wages of existing employees. This tax credit would be capped at $500,00 per business. This will also apply to new start-ups at 50% of the credit. The plan would give a tax break of $5,000 per new employee that a business concern hires in the year 2010. 33 billion is the expected cost of this program.
Through the Social Security payroll tax, a small business would also be reimburse for increasing payroll. This could be done through increasing hours or wages. The tax break would be on the added payroll taxes that would result in the increase in payroll. This would be capped at the current maximum of $106,800.
Small businesses will have the option to claim this tax credit on a quarterly basis. The White House feels that giving this incentive on a quarterly plan would increase awareness and get more small business to take advantage of the program. Not for profit will also be eligible.
The White House gave these examples:
- 10 new employees in 2010 would result in a $50,00 tax credit to that small business.
- Pay raises for 50 employees that would result in a $1,000 per employee, would give the business concern a $3,100 tax credit.
- Oversight will be in place to prevent gaming of the system. A firm that hires 20 employees and fires 20 will not receive a tax break.
Find out more about the Small Business Jobs and Wages Tax Cut and the 30 billion that is proposed to go to community banks at the whitehouse.gov website.
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