Supporting small businesses will be the key to restoring healthy job growth in the U.S., according to participants in the “Jobs, Jobs, Jobs” panel at the Milken Global Conference in Los Angeles today. But the panelists — Ron Bloom, senior advisor, U.S. Treasury Department; Ohio Treasurer Kevin Boyce; Ross DeVol, executive director of Economic Research for the Milken Institute; and Carly Fiorina, former CEO of Hewlett-Packard and a candidate for U.S. Senate — did not share a consensus on what kind of help the government should provide.
Are tax cuts the answer?
Fiorina thinks so, saying that small businesses are struggling under taxation, on top of their challenges in getting access to credit. She argued that longer-term reductions in tax rates would have been more successful in encouraging hiring at small businesses than a one-time tax credit. DeVol echoed that sentiment, pointing to our relatively high corporate tax rates as a deterrent to job growth in the U.S.
“Not all jobs are created equal”
“Why have we allowed the R&D tax credit to expire,” asked DeVol, “and why haven’t we made it permanent?” Not all jobs are created equal, he argued, and this credit supports cutting-edge research and innovation.
Was the stimulus spending worth it?
Fiorina was critical of both both the stimulus bill and TARP, saying she wouldn’t have voted for either bill in the forms in which they passed.
But Boyce says that without the $6 billion in stimulus that his state received, Ohio would have lost 26,000 more jobs, putting it in a “catastrophic” position. The impact of widespread job losses is devastating to communities, he said. “We say ‘let GM fail, let Chrysler fail,’ but we have entire regions of our country built around those industries.
DeVol was generally supportive of the stimulus spending, including extending unemployment insurance. Infrastructure investment was wise, he said, but he would have preferred that the mix have been geared more toward cutting-edge technology.
Image credit, AndreiRybachuk, via iStock
What do you think? As HR professionals and managers, what do you think it will take to get small businesses hiring again?
Twitter
Facebook
Linkedin
RSS
[...] This post was mentioned on Twitter by Emily Molitor, SmartBriefWorkforce. SmartBriefWorkforce said: What @carlyforca et al think it will take to get #smallbiz hiring again http://ow.ly/1DjFT #gc2010 [...]
Even with making the R&D Tax Credit permanent, there are two significant issues with the existing R&D Credit regs:
First, the regs are difficult to follow without a thorough understanding of the tax law. This often requires qualified US manufacturers to hire outside consultants to guide them through the details. Unfortunately, the cost of consultant support has made it prohibitive for many small to mid-sized manufacturers to benefit from these federal incentives. Today, tens of thousands of these manufacturers have historically bypassed this valuable tax credit.
Second, in 2008, the IRS elevated the R&D Credit to a Tier 1 Issue, which has put more emphasis on the need for contemporaneous documentation. To defend the R&D Credit in an audit, a taxpayer needs to qualify every R&D project under the regulations, AND identify costs associated with the project while the costs are being incurred (known as nexus). This documentation requirement is burdensome on engineers and production management staff, which makes capturing and defending the Credit a challenge for most manufacturers.
To address both these issues, we built Titan Armor – a low-cost software solution that helps manufacturers meet the current regulatory requirements for the R&D Tax Credit. You can get more information at http://www.titanarmor.com.