Ellington

October 28, 2004

Given our country's sluggish economy, both presidential candidates say they will help spur small business growth over the next four years. Their strategies are very different, however.

President Bush, in a speech to aviation workers in Wisconsin, elaborated on his tax relief plan, which emphasizes the reduction of personal tax rates. He claims that cutting the personal tax rates has a positive effect on small businesses, because most of them are subchapter S corporations or sole proprietorships, which means they pay tax on corporate profits on their personal returns. "If 70 percent of the new jobs in America are created by small business, and by reducing all tax rates puts money into small business' pockets, it seems to make sense that people ought to be supporting the tax cuts all across America," Bush says.

Bush's logic is that by giving tax relief to small businesses, these business owners will in turn invest that money into their company, whether by hiring new employees or purchasing new equipment.

John Kerry's plan for small business growth, as outlined on his Web site, would give a bigger voice to small companies, alongside new federal initiatives to spur growth. Kerry wants to strengthen the base of small manufacturers in the United States by augmenting loan and investment limits, developing a manufacturing skills training program for current workers and students, and creating an Office of Manufacturing at the Small Business Administration. Instead of Bush's across-the-board tax cuts that largely benefit the very wealthy, Kerry proposes more specific tax credits for small businesses based on certain criteria. These include tax credits for small businesses that are attempting to reduce energy costs, and credits for companies whose reservists are called for active duty. In addition, Kerry plans to boost the federal government's investment in venture capital, as well as increasing the percentage of federal contracts for small businesses.

The candidates both want to lower health care costs for small business and help lower medical malpractice liability rates. Bush looks to reduce rising health care costs by allowing small businesses to band together and pool their risks (called associated health care plans), so they can have the same purchasing power as big companies. Kerry proposes refundable tax credits (for up to 50 percent of the cost of coverage) to small businesses, as well as giving access to the Congressional Health Plan.

In local campaigns, Rep. Chip Pickering in the 3rd District has voted for tax cuts on small businesses, including a $46 million tax cut in 2000. He also voted for a bill putting a $250,000 ceiling on medical malpractice suits. His opponent, Jim Giles, is for across-the-board tax cuts on business. Democrat Bennie Thompson in District 2 voted against the $46 million tax cut bill for small businesses. Challenger Clinton B. LeSueur believes in
reforming job-training programs as well as modernizing economic development programs, but gives few specifics.