January 15, 2003

"Small Business Friendly" Stimulus Plans Won't Help Most Small Businesses

So-called stimulus plans that don't take microbusiness reality into account won't be effective, says MicroEnterprise Journal editor Dawn Rivers Baker

Sidney, NY -- The national small business community has been almost uniform in praising the Bush Administration's economic stimulus plan for its small business provisions. The plan includes an increase in the current expensing limit, from $25,000 up to $75,000. Small business organizations such as the National Federation of Independent Business and National Small Business United have expressed their complete approval of the plan as "small business friendly."

But, according to Dawn Rivers Baker, publisher of The MicroEnterprise Monthly, the plan is not as small business friendly as it appears.

"Most small businesses don't normally bump up against that $25,000 expensing limit," says Ms. Baker. "So, while neither of these economic stimulus plans hurts them, it doesn't help most of them, either."

According to an analysis of Census Department data performed last year by the Center for Women's Business Research, ninety percent of all U.S. businesses employ fewer than five workers, making them microbusinesses. In addition, 63% of all U.S. businesses earn less than $50,000 in annual revenues. New York State, along with California and Texas, has one of the largest populations of these microbusinesses in the nation, according to statistics published by the U.S. Small Business Administration, Office of Advocacy. Small business tax breaks will only have a marginal impact on New York's robust microbusiness population.

"A small business with more employees and higher revenues will find these kinds of tax breaks a godsend," remarks Ms. Baker. "That may well have a very positive effect on the economy, particularly if it improves the unemployment situation. But the vast, vast majority of small businesses will get no direct benefit from increased expensing limits."

The competing plan that was proposed by Congressional Democrats includes a more modest expensing increase, up to $50,000.

DAWN RIVERS BAKER is the President and CEO of Wahmpreneur Publishing, Inc., publisher of information products for microbusiness owners. Ms. Baker is a member of the Society for Professional Journalists and the Online News Association. Wahmpreneur publications include The MicroEnterprise Journal, an online microbusiness news weekly, and The MicroEnterprise Monthly, a insiders policy and politics subscription newsletter.

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