Congress can help where Arizona fell down
PHOENIX, Ariz., June 10, 2014—Today’s release of one of the nation’s most trusted economic surveys casts in sharp relief how pervasive our political leaders’ inattention to small-business job creation is, according to the Arizona state director of the National Federation of Independent Business, America’s voice of small business.
As it does very month, NFIB releases its Index of Small Business Optimism, which measures the pulse of the nation’s largest employer group—Main Street entrepreneurs. Although the index rose to its highest level since 2007, the underpinnings of a strong economy are still not seismically sound.
“What stood out for me in the latest optimism index was Arizona’s missed opportunity to spur capital spending and new job creation by our own small businesses when Governor Brewer vetoed House Bill 2664 earlier this year,” said Farrell Quinlan, Arizona state director for NFIB. The bill, which passed the Legislature with overwhelming bipartisan majorities, would have created an immediate state income tax allowance for qualifying business equipment investments valued up to $500,000, similar to federal Section 179 expensing.
Indeed, in summarizing the latest optimism index, economist William Dunkelberg, its author, noted, “May’s numbers bring the Index to its highest level since September 2007. However, the four components most closely related to GDP and employment growth (job openings, job creation plans, inventory and capital spending plans) collectively fell 1 point in May.”
“Shifting capital spending into a higher gear is essential to a full and sustainable economic recovery,” said Quinlan. “Now, even though Arizona’s capital expensing vehicle stalled, Congress can turn on the ignition of job creation by passing H.R. 4457, the Small Business Tax Relief Act, when it comes up for a full House vote Thursday.
H.R. 4457 would allow small businesses to immediately deduct on their federal taxes the full value of equipment in the same year the investment is made, instead of depreciating the investment over time. This simplifies accounting and frees up cash to be reinvested and grow the business.
“The job-creation user’s manual is pretty straightforward and easy to follow,” said Quinlan. “If business owners have an incentive to invest in more equipment, they will need to hire more employees to meet the increased sales that equipment will generate. But I worry H.R. 4457 may face a similar grim fate in Congress as House Bill 2664 suffered in Arizona, despite everyone—Democrats, Republicans, business and labor—favoring it, a tragic misreading of the economy’s weakness will lead to continued inertia and another missed opportunity.”
Despite broad, bipartisan support, small-business federal expensing fell from $500,000 to $25,000 this year because previous extensions were temporary. H.R. 4457 would provide small businesses with expensing levels that are permanent, predictable and at a level adequate to their needs.Click here to read a letter 154 business associations signed and sent to Congress.
NOTE: The NFIB Research Foundation has collected Small Business Economic Trends data with quarterly surveys since 1974 and monthly surveys since 1986. Survey respondents are drawn from NFIB’s membership. The report is released on the second Tuesday of each month. For almost 40 years, NFIB’s Index of Small Business Optimism has been one of the nation’s bellwether economic barometers, used by Federal Reserve, chairmen, congressional leaders and presidential administrations.
For more than 70 years, the National Federation of Independent Business has been the Voice of Small Business, taking the message from Main Street to the halls of Congress and all 50 state legislatures. NFIB annually surveys its members on state and federal issues vital to their survival as America’s economic engine and biggest creator of jobs. NFIB’s educational mission is to remind policymakers that small businesses are not smaller versions of bigger businesses; they have very different challenges and priorities.