Obama's Small Business Tax Plan

The McCain campaign has made a lot of fuss recently about Obama and taxes. It's clear that their strategy this week turns on a classic Republican ploy: portray all Democrats as "tax-and-spend liberals." The McCain camp debuted a new ad this week called "Taxman," that declares Obama's policies an "economic disaster."

But Factcheck.org and Politifact.com take issue with that assessment, pointing out that many of the McCain campaign's claims about Obama's tax initiatives are false or misleading.

In fact, even the conservative magazine National Review recently acknowledged that Obama's plan offers more tax relief for middle class families than McCain's.

Recent McCain campaign emails specifically target Obama's tax plan for small businesses. The campaign has repeatedly claimed that Obama's tax policies would raise taxes on 23 million small businesses, but, as Factcheck.org points out, that is simply not true. The Obama plan actually provides tax relief to small businesses in the form of a proposed capital gains tax exemption and tax credits to help cover the cost of employee health plans.

During a June interview with the Wall Street Journal, Obama stated he will exempt start-up small businesses from capital gains taxes in order to encourage small business development, saying, "Companies that are starting off...should be allowed to accumulate capital, reinvest profits, if there are any, to the point that they stabilize."

And the Obama campaign's official small business plan, available on the campaign website, states:

Barack Obama will reduce the burden on small businesses in our economy by offering a new Small Business Health Tax Credit to help small businesses provide quality health care to their employees. The Obama Small Business Health Tax Credit will provide a refundable credit of up to 50 percent on premiums paid by small businesses on behalf of their employees.

Factcheck.org concludes that under Obama's small business tax policies, in terms of overall tax rates, "The vast majority would see no change, and many would get a cut."

In addition to a small-business-friendly tax plan, Obama has put forth a number of other policy proposals to encourage small business growth.

Obama plans to allow small businesses to participate in a cooperative National Health Exchange to give them the same collective bargaining power in negotiations with health insurance companies that larger corporations currently enjoy. He also proposes a federal health care re-insurance program that would protect small businesses against catastrophic losses related to employee health care coverage.

Obama outlines an expansion of the Small Business Administration loan program that would make it easier for start-up small business entrepreneurs, particularly women and minorities, to access capital for a new business, and imagines a national network of public-private business incubators that would educate and support new business owners to foster greater small business success.

To support women in business, Obama plans to enforce the guidelines set down by Congress during the Clinton Administration under the Women-Owned Business Federal Contract Assistance Program, which state that the federal government should aim to award 5% of yearly contract funds to women-owned small businesses. Currently, the federal government is failing to meet even that incredibly conservative benchmark. (Yes, you read that correctly. The federal government is failing to award even 5% of its contracts to women-owned small businesses. I'm flabbergasted.)

Obama's small business proposals also include providing disaster relief funds to small businesses in the event of a major natural disaster, improving internet access in rural areas that lack communications infrastructure, to help small rural businesses compete with urban businesses on the web, and offering technical support and training to rural business owners.

You can read about many of Obama's small business proposals in this official campaign document.

Comments

[cynematic]

Excellent mix of general small business programs and ones tailored to foster small business ownership and success by women.

Thanks for putting the facts out there.

[Hopelessly Confused]

What is Obama's definition of "small business" exactly? Can you help me out? Is that the SBA definition (revenues less than $6.5 million) -- or something else? Suppose an LLC that has less than 6.5 million in revenue is sold and the transaction results in a net gain of 5 million dollars. Would the partners in that LLC be exempt from capital gains on their share of that gain -- or not?

[Beth from Albany, Or]

I was on my way to get my son, I had forgot that I had already been driving around canvassing with the “low fuel” light on and now I was on empty according to the gauge. I was stressed. I was almost there when a tall, thin scruffy guy on the side of the road was staggering on the sidewalk hitting his body against light poles and nearly falling in the street in front of me. Now I am freaking. I get to the YMCA and ask to use the phone to call the police. OK everything good. Son had great time – I had to get gas immediately. I chose to go to the other Arco station in town because it was closer, “we are not allowed to pump our own gas” so I give the attendant my cap key and my debit card. He keeps giving it back to me saying he can’t take it until he has pump the gas. This is not what happens at the other station. He then takes the card and swipes it into a machine and asks if it is credit/debit I say debit, he gives it to me to put in my pin, it prints a receipt that shows that $5.45, I said I wanted $5 gas – he said it costs 45 cents to use debit. He did not tell me that b/f hand. So that cheaper gas just turned into an extra 20 cent per gallon for me since I only paid for about 1.4 gallons. I am not happy. I now only have $5.65 in my checking account, not that 45 cents made any difference, it was the principle of it. Gas prices and poor people; get the idea?

Next crazy experience continued next ---

After calming down from being angry (something I rarely am), I go to the store to pick up ice (for obvious reasons here in Oregon right now), I got the ice and also went to get a bunch of protein bars that were on sale and use the “coupon” I got the last time I was there; Laughs on me. I start to check out and give the cashier the coupon, only to be told that it is a “notice to RECEIVE” a coupon the next time you purchase this product to use on your third trip to buying this product. About now, I am truly trying hard to be me, the calm, let things go kind of person. I really tried, but I couldn’t let this one go. I realize that even grocery stores are suffering and trying to get people into their stores to buy life supporting items like FOOD, but this was just deceitful. After her trying to explain it to me several times and me saying that I was told a different story when I received this so-called “notice of a coupon” that looks exactly like a coupon, I told her that she could redo my order and split it in half so that I could use the coupon, that was just printed, on the second half of my order. I thought that was a good way to solve OUR problem. I think she did not want to take the time to do it and just gave me the $3 coupon off; telling me that I need to pay attention from now on to make sure it is a coupon rather than a “notice I will be receiving a coupon” to spend on a future purchase. I am still in disbelief. I am raising a special needs son; we live on very little money, I usually don’t even shop at this store because it is more expensive than the one I usually shop at, and now I am thinking I would rather not eat than to go back.

Oh yea, all of these experiences occurred from the time I left my home until I returned, inn 45 minutes! I was so glad to be safe in my home curled up on my sofa, listening to my son’s fun he had on his camping trip.

How this relates to anything? Well, I know now just how sad of a situation America is in. There are many of us that can only buy 1.4 gallons of gas at one time, gas stations and grocery stores have now stooped to deceitful practices to make money. What happened to my United States of Americans? All of them, the rich, the poor, the large business corps, the small independent business – Could all of us ever figure out how to get this nation out of this mess.

The one and only true thing I know in my heart is – Having anxiety over finding my O-button just justified! I may never meet him in person, but he is with me every time that O-button is displayed on my clothing and anyone who notices will know where I stand. November 4th, can’t get here fast enough for me.

I’ll shut up now. Sorry for the book.

Albany, OR

[jaelithe]

Hopelessly Confused-- I believe Obama has said he will only exempt start-up small businesses from capital gains taxes. This would theoretically exclude situations like the one you describe-- it would have to be a brand-new, independent business. But I am not a tax lawyer, so you might want to do some more research.

[Catherine]

Dear Hopelessly,
According to Baracks Small Business plan, you are included. Following is his support plan for small businesses. As you read it, be sure to note that it says START-UP AND SMALL BUSINESSES.His plan ELIMINATES CAPITAL TAXES. It is clearly to your advantage. I have also included McCain's plan for you to view.

Notice that he is going to lower your taxes, but YOU WILL PAY CAPITAL GAINS. He is going to phase out some taxes, but he does not tell you how long that will take. It could take 5 years or more!! In addition, he only is supporting small business for people because he expects them to lose their jobs, I guess that means no unemployment compensation. No start up either.McCain blatantly lies about Baracks tax plan at the end, He lies so easily, that you really don't know what will happen to your business. Anyway, I hope I have been of some help.
Good Luck!
Catherine

BARACK OBAMA:
Support Small Business

* Provide Tax Relief for Small Businesses and Start Up Companies: Barack Obama will eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation. Obama will also support small business owners by providing a $500 “Making Work Pay” tax credit to almost every worker in America. Self-employed small business owners pay both the employee and the employer side of the payroll tax, and this measure will reduce the burdens of this double taxation.
* Create a National Network of Public-Private Business Incubators: Barack Obama will support entrepreneurship and spur job growth by creating a national network of public-private business incubators. Business incubators facilitate the critical work of entrepreneurs in creating start-up companies. Obama will invest $250 million per year to increase the number and size of incubators in disadvantaged communities throughout the country.

JOHN MCCAIN:
Taxes: Simpler, Fair, Pro-Growth, And Competitive

Keep Tax Rates Low: Entrepreneurs are at the heart of American innovation, growth and prosperity. Entrepreneurs create the ultimate job security - a new, better opportunity if your current job goes away. Entrepreneurs should not be taxed into submission. John McCain will keep the top tax rate at 35 percent, maintain the 15 percent rates on dividends and capital gains, and phase-out the Alternative Minimum Tax. Small businesses are the heart of job growth; raising taxes on them hurts every worker. John McCain's opponent wants to increase the marginal income tax rate which applies to the nation's 23 million small business owners who pay their taxes under the individual tax rate system.