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Many Small Businesses Asserting Problem is Not Tax Credits But Low Demand
Published on Dec 20, 2010
Read 'Many Small Businesses Asserting Problem is Not Tax Credits But Low Demand' at 'Time to Start Up,' the small business blog by BizFilings.
In light of Thursday night's Congressional passage of the $801 billion tax credit package, many small business owners are pointing out that it is not tax credits that businesses are in need of - it is greater demand.
"I don't think (the tax cuts) will matter much at all. I have such confidence in my business that even without the tax cuts I would have taken the money off my home line," small-business owner Susan Povich, referring to a credit line on her home mortgage, told Reuters.
President Barack Obama's tax plan, which passed through the House of Representatives at midnight Thursday night, will extend Bush-era tax cuts that would have expired at the end of this year until 2012 - a measure Republicans have touted as crucial in promoting business growth and job creation.
However, the private sector is currently sitting on a massive trove of liquid assets which, in light of economic conditions, they are merely hesitant to spend. According to Federal Reserve data, as of September, $1.9 trillion in cash is currently held by private business, accounting for 7.4 percent of total company assets - the highest rate in more than 50 years.
With such a bounty of funds waiting to be unleashed, economists and lawmakers have been trying to determine measures to provoke spending and hiring on a massive scale - a surefire kick-start to entrepreneurs forming a company and widespread economic recovery.