President Obama along with other members of his Administration landed in Cleveland Ohio on February 22 to listen to small business owners. This issue of “access to capital” came up quite frequently.
In response to one business owner’s idea that tax policy should be changed to encourage investments in small business – specifically a zero capital gains tax for investments in small businesses – President Obama said, “That is such a good idea, that we implemented it last year.”
True, the President did sign this policy measure as part of the Small Business Jobs Act last year. It was then extended for 2011. But there is a serious flaw in the policy – it only applies to C corporations (with assets of less than $50 million).
Most small businesses are not structured in this way. Most are structured as partnerships, S corps or LLCs, or have no formal structure at all.
In addition, certain field or industries – like farming, restaurant/hotel operations, accounting, law, banking and financing – do not qualify for this specific zero capital gains tax incentive.
Those “anchors of Main Street” in Cleveland that President Obama referred to in his remarks continued to bring up “access to capital” as a serious challenge throughout the forum because more broad-based measures and incentives are needed.
How about zeroing out capital gains taxes period, rather than raising these taxes in 2012 as President Obama proposes to do in his budget?
Karen Kerrigan, President & CEO