As President Obama touts his new plan to spur small-business growth and encourage job creation in a sputtering economy, the National Restaurant Association is voicing support for a U.S. Senate bill that encompasses several key pro-business initiatives.
The Small Business Jobs Act of 2010, which was introduced earlier this summer by Sens. Max Baucus, D-Mont., and Mary Landrieu, D-La., includes provisions that would help provide restaurants with tax relief while increasing access to capital, enabling operators to grow and expand, the NRA said.
In addition, the bill seeks to repeal a provision included in the health care reform law that many believe would burden restaurateurs and other businesses with a massive increase in paperwork.
Dave Koenig, director of tax and profitability for the NRA, said the association is “supportive of the Senate bill. It contains provisions that are beneficial [to the restaurant industry]. “
He added that the NRA also believes the bill can be passed “at least post-election. There is an overall broad bipartisan support for it.”
Provisions in the measure include:
• Access to capital. While President Obama supports ways of increasing access to capital for small businesses, the Senate measure calls for the establishment of a $30 billion Small Business Lending Fund, which would assist small banks seeking to provide loans to small businesses.
The bill also would boost the maximum size of Small Business Administration loans from $2 million to $5 million for SBA 7 (a) loans and from $1.5 million to $5.5 million for 504 loans.
The fees on those loans, which were eliminated in 2009, would continue to be eliminated through the end of 2010, Koenig said.
• Tax relief. The Senate measure would allow operators to expense up to $250,000 of the cost of improvements made to their restaurants, which would include investment in new equipment. The president’s plan differs slightly in that it would allow businesses to deduct from their tax bills 100 percent of that investment. The rate is currently 50 percent.
• Repeal of 1099 form amendment. When health care reform legislation was passed earlier this year, few noticed that it contained an amendment that would require businesses to fill out a 1099 form for every non-credit-card business expense beyond $600. If implemented, the requirement could create mountains of paperwork for small businesses.
As a result, an effort has been made in the Senate to repeal it. Sen. Mike Johanns, R-Neb., introduced an amendment to the jobs bill that would fully eliminate the requirement, while Ben Nelson, D-Fla., is seeking to partially repeal it. The NRA said it favors full repeal, as does the U.S. Chamber of Commerce and the National Council of Chain Restaurants.
• Tax extenders. While restaurant depreciation is not currently included in the Senate measure, Koenig of the NRA said it is expected to be added to the bill. The NRA favors legislation that would extend the current 15-year depreciation schedule for a longer period of time — preferably permanently.
The NRA also is hoping that action will be taken on the estate tax, also known as the death tax, which is not included in the measure. If no action is taken by the end of the year, the tax will return to pre-2001 levels, which calls for a rate as high as 55 percent and a $1 million exemption. Koenig said the NRA supports something more in the neighborhood of a 35-percent rate and $5 million exemption.
• Bush tax cuts. While they are not part of the Senate jobs bill, the tax cuts passed under President George W. Bush in 2001 and 2003, are “the 1,000-pound gorilla,” Koenig said.
While Obama said he would be willing to continue to give those tax breaks to most Americans, he opposed extending the cuts to the top 2 percent of the wealthiest Americans — those individuals making more than $200,000 annually or families making more than $250,000.
The NRA would prefer to see all cuts extended for all taxpayers, Koenig said, noting that many association members are not organized as traditional corporations and file taxes as flow-through entities, which are taxed in many cases at the same rate as upper-income individuals.
“It’s a high-profile issue, and it’s not clear how it will finally be addressed,” he said.
Contact Paul Frumkin at [email protected].
