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President's Budget Good, Bad or Ugly for Small Businesses, Depending on Who You Ask

To some, it's a responsible, carefully designed set of investments and reforms, a paragon of tough, but sensible fiscal management in trying economic times. To others, it's an empty, dangerous political gimmick; a scandalous doctrine of job-killing tax increases that will plunge America into the dark ages.

Opinions on the president's recently submitted budget for fiscal year 2013 were always going to be extreme, but the truth, as usual, lies somewhere in the middle. Really, the budget is such a large document and contains so many multitudes that, in most cases, it can be good, bad and ugly all at the same time.

As the nation continues to look to small businesses to build on a still-nascent job recovery, opinions on how President Barack Obama's budget treated the all-important sector were especially diverse. "The president's budget for the Small Business Administration (SBA) reaffirms his pledge to help support the engines of the economy and be ready to help businesses and home owners in the aftermath of disasters," said Senator Mary Landrieu (D-LA), chair of the Senate Committee on Small Business and Entrepreneurship. "This is a very strong budget, in tough budgetary times."

On the other hand, Landrieu's House equivalent, Small Business Committee Chairman Sam Graves (R-MO), seemingly found nothing in the budget worth praising. "American small businesses are facing an unprecedented number of barriers to growing their companies, and today's budget adds to their problems by fueling the cloud of debt that lingers over the nation," he said. "This budget is bad for small businesses because it further strains the economy by worsening the national debt and punishing business owners by raising their taxes. Despite the obvious need to address our nation's unsustainable debt and despite the president's promise to cut the deficit in half, this budget actually increases it even more, marking the fourth straight year of deficits exceeding $1 trillion."

The House Ways and Means Committee, chaired by Dave Camp (R-MI), was even more blunt in its distaste, issuing an all-caps statement that read "Bottom line—tax hikes don't add up to the jobs American people need."

While Democrats have been generally supportive of the budget, many of them are already walking sideways on certain issues, most notably the fact that the budget will make only minor reductions to the deficit. The White House itself predicts that the annual deficit will fall from $1.33 trillion in 2012 to $901 billion in 2013, which Republicans and many moderate Democrats agree isn't nearly enough. The GOP, however, continues to struggle with an ideology that demands deficit reduction while practically outlawing tax increases.

Specific provisions of the budget would extend a 100% first-year depreciation deduction for certain property, expand the payroll tax cut, provide a temporary 10% tax credit for new jobs and wage increases, provide tax incentives for locating jobs and business activity in the U.S., provide a new "Manufacturing Communities" tax credit and permanently eliminate capital gains tax on investments in qualified small business stock. As far as tax increases are concerned, the budget would allow the Bush 2001 and 2003 tax cuts to expire, restore the estate tax to 2009 levels, limit tax expenditures for the most affluent, eliminate the carried interest loophole for hedge fund managers and other similar investment service providers, and eliminate special depreciation rules for purchases of corporate jets and other general aviation passenger aircraft.

The budget that will eventually be enacted will undoubtedly look little like the president's current proposal. Nonetheless, the first shot of Barack Obama's reelection campaign has officially been fired.

Jacob Barron, CICP, NACM staff writer