By Hector Barreto
April 15 has become almost an anti-holiday: A day that everyone notes but does not celebrate. We don’t give gifts on Tax Day, and we don’t get the day off from work. The only observances involve sending complex accountings of our finances to the government, and frequently writing checks to accompany them.
There is some good news on Tax Day this year, however. The results of President Bush’s jobs and growth tax cuts, signed into law last spring, are now being fully realized. Across the country, Americans are realizing that they owe the government less than they expected — or, even better, that their refunds are greater than expected.
Perhaps even more importantly, millions of small business owners are coming to the same conclusion. Many American small businesses are unincorporated. That means that they file their income taxes as individuals, which in turn means that they benefit from the very same tax cuts that are making this Tax Day a little brighter for us all. Those business owners, like all of us, are free to choose how to spend the extra money they will keep this year. Some might save it. But most will reinvest it in their business. They might hire someone to design a new Web site with it. They might add to their sales staff. There are any number of ways in which they might expand, and every single one of those ways ultimately means more economic growth and more jobs for hard-working Americans.
The income tax cuts are not the only part of the jobs and growth package that has brought a smile to the faces of America’s entrepreneurs. The president’s plan also quadrupled deductibility on the expensing of business equipment, from $25,000 to $100,000. I regularly talk to business owners across the country, and everywhere I go, I hear stories about entrepreneurs who are expanding their capacity and growing their businesses because of this new provision in the law. From copy machines to computers to trucks to new office space, small businesses are investing in the future. What does this mean? For one thing, it means more jobs. An entrepreneur buying new trucks needs people to drive them. A small business owner opening a new satellite office needs someone to staff it. Those are real results, and they are not the only ones. As with all things in our economy, there is a ripple effect to this surge of small business purchasing. After all, the company that sold the truck or built the new satellite office is benefiting as well.
There are other indications that the plan is working. Last month, our economy created 308,000 jobs. In the last seven months, we have added more than a quarter of a million jobs. Historically, we know that small businesses have always led the way in job creation. Three out of every four net new jobs in this country are created by small business. More than 99 percent of employers are small employers. Small businesses are our nation’s job creators, and when we help them, as the president’s jobs and growth package did, we are helping all hard-working Americans.
That does not mean our work is over. As the president has pointed out, there are still taxes that stand in the way of even greater growth and job creation by America’s small businesses. The death tax remains an unfair tax that hurts small businesses disproportionately. Double taxation is bad enough, but forcing family businesses to sell out or break up upon the death of a loved one is cruel. Our entrepreneurs deserve the opportunity to pass on their successful legacies to the next generation. The death tax must be eliminated permanently.
These tax cuts are all due to automatically expire unless Congress acts to make them permanent. Tax Day might not be a real holiday, but this year it will be far a less painful day for Americans and for America’s small businesses. If Congress makes the tax cuts permanent, it will make all future tax days that much easier to bear. (Hector Barreto is the administrator at the U.S. Small Business Administration).
Originally published in the Santa Monica Daily Press print edition on April 15, 2004. Read the original PDF.