NEW YORK (AP) — President Barack Obama’s proposed federal budget is a disappointment to the National Federation of Independent Business. The advocacy group that represents small companies says it leaves owners guessing about what to expect in the future on taxes and regulations.
Chris Walters, the NFIB’s senior manager for legislative affairs, says the proposed budget for the fiscal year that begins Oct. 1 doesn’t seek some tax law changes that would benefit small businesses. For example, it doesn’t raise what’s known as the Section 179 tax deduction for equipment purchases.
He also says the Obama proposal doesn’t increase the amount of money budgeted for the Small Business Administration to review new regulations that affect businesses.
Small business owners wanted to see more certainty in the regulatory and tax environment from Obama’s budget, Walters said in an interview with The Associated Press. Without more certainty, he said, it’s hard for businesses to plan for the future.
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The budget proposal still has to make its way through Congress, which can be counted on to make changes. In the meantime, here’s a closer look at these issues:
Small business taxes
The Section 179 deduction, named for a provision in the Internal Revenue Code, is intended to benefit small businesses. It allows them to deduct up-front the cost of certain kinds of equipment rather than depreciate it over a period of years. During the financial crisis, the limit on the deduction was increased dramatically, to $500,000, to help small businesses and stimulate the economy. But this year, it’s down to $125,000, and in 2013, it falls back to $25,000, the level where it stood in 2003.
Walters noted that Obama’s budget message doesn’t change that downward progression. The NFIB wants the deduction to go back up to $500,000 and stay there. Walters said of business owners, “they need to plan their business.” The continual changes in tax laws make it hard for companies to plan for more than one year at a time — even though accountants urge their small business clients to do long-term financial planning.