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Unpacking The Jobs Plan continued..

September 14, 2011

Small Businesses

Mr. Obama’s plan would cut payroll taxes in half for up to the first $5 million in wages businesses pay and offer a $4,000 tax credit to companies that hire long-term unemployed. It would also extend the so-called “100% expensing,” which allows firms to take an immediate 100% tax deduction on capital investments, an incentive that would otherwise expire at the end of the year.

Companies that are on the fence about making a new hire might decide to do so with the tax incentives, said Bob Litan, vice president for research and policy at the Kauffman Foundation, an entrepreneurship advocacy organization.

Still, because the proposed tax breaks are temporary, their effectiveness in creating hiring will be blunted, said Bill Rys, tax counsel at the National Federation of Independent Business, a small-business association.

“A lot of the concerns that we’re hearing from our members are long-term issues,” not temporary problems, he said, citing a July study the group conducted in which 51% of small-business owners said lack of demand as their No. 1 problem.

— Jeremy Greenfield

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