WASHINGTON, D.C. – The U.S. Senate today approved legislation that will expand the federal government's reach into neighborhood banks.
The bill, coined the "Small Business Jobs Act," is ostensibly aimed at encouraging small businesses to create jobs through tax rate reductions and other incentives. But while the legislation temporarily reduces taxes by $12 billion, it ignores the looming $300 billion permanent increase in other taxes that will hit small-business owners at the beginning of 2011, according to a recent report in the Wall Street Journal.
"The Obama Administration is offering small businesses temporary tax relief in one hand, but then plans on smacking them with permanent tax increases with the other," said Kyl. "To create jobs, small businesses need the certainty that they will be able to keep their own capital, not additional lines of credit from Uncle Sam. Congress can provide this certainty by immediately extending current tax rates for small-business owners and all Americans."
While there are a number of provisions that could have drawn bipartisan support, the bill contains a $30 billion Small Business Lending Fund, which would function similarly to the Troubled Asset Relief Program (TARP). This bill authorizes the Treasury Department to use the fund to purchase stock in community banks if participating entities agree to aggressively lend to small business.
"In other words, the Small Business Lending Fund would allow the federal government to take equity stake in community banks so long as these banks lend how Congress dictates," said Kyl. "Over the past two and half years, the Obama administration and the Democrat-led Congress have expanded the reach of the federal government into our student loan industry, the financial sector, the automotive industry, and our health-care system. Now, they are attempting to take a stake in our neighborhood banks."
Senate Democrats also beat back an effort by Senator Mike Johanns (R-Neb.) to rescind a portion of the new health-care law that would place a financial and bureaucratic burden on small businesses. Known as the 1099 reporting requirement, it requires companies to report to the Internal Revenue Service when they purchase goods costing more than $600 annually from a vendor or supplier. Thus, starting in 2013, businesses will have to report simple transactions, such as purchasing office equipment and supplies. This new mandate is expected to wallop over 30 million small businesses with increased paper work and costs to comply with the new reporting requirement.
Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees. Visit his website at www.kyl.senate.gov.