Those Dog Gone Pesky Facts

We were scolded this pm by the nursery crowd for not highlighting today’s signing by BO of a bill providing small business tax breaks, something to crow about apparently. Well, we know facts can be very pesky critters, so let’s take a look at this little dandy.

The bill contains $12 bln of tax cuts for little guys, such as a 100% exclusion of cap gains income for certain small start ups, expensing for certain capital expenditures, and new deductions for start-up expenses. Whoa now!

One little problem. Only a fraction of businesses will be eligible, and the write-offs last for only one, maybe two years. What is that Obama?

As the WSJ asks, while in fact granting the WH is correct that a cap gains tax cut will help small businesses raise capital, is “why raise that tax rate to 20% from 15%on Jan/1 for everyone else?” And as these folks illustrate, “This bill isn’t even a net business tax cut, because the temporary small business cuts are offset by permanent corporate tax increases. Obama is promising $12 bln of cuts with his left hand while proposing to collect about $300 bln in tax increases from this bill, and others, with his right.”

Gosh, guess that’s why we didn’t highlight this deal.

Robert Craven