WASHINGTON — The Senate passed the $787 billion plan to resuscitate the economy late Friday, and President Barack Obama is ready to sign the economic legislation today in Denver. The bill, which combines $281 billion in tax cuts for individuals and businesses with more than a half-trillion dollars in government spending, is meant to reinvigorate job creation, consumer spending and public optimism.
Businesses, unfortunately, won’t fare as well as they did in earlier versions of the legislation, as some of their breaks were scaled back or eliminated. However, the U.S. Chamber of Commerce has come out in support of the overall package.
“While we’re concerned with individual items in this package, the whole is more important than the individual parts,” Bruce Josten, the Chamber’s executive vice president for government affairs, said in a statement. “The global economy is in uncharted and dangerous waters, and inaction from Washington is not an option. No package of this size can be perfect, but we need a bill that will unlock capital markets, free up credit, and create momentum in the economy.”
Among the provisions for businesses is one that would allow money-losing small businesses to use their losses to offset profits made in the previous five years — rather than two — making them eligible for tax refunds. The provision is limited to businesses with annual revenues under $15 million, reducing the cost to $947 million.
Businesses buying equipment such as computers can speed up its depreciation through 2009. Michael Metz, executive vice president of tax services at the accounting firm RSM McGladrey, says the bonus depreciation is a good incentive for companies to upgrade equipment even if they aren’t ready to add capacity, according to the Associated Press.
In addition, businesses restructuring their debt could delay paying taxes on the transaction for five years, and then spread the payments over an additional five years.
“The Chamber is disappointed that the net operating loss (NOL) provision is not expansive enough to apply to all businesses, but we’re pleased that the current bill will provide some help to smaller Main Street businesses,” Josten’s statement says. “We support the cancellation of indebtedness tax provisions that will encourage businesses to restructure and reduce debt, enabling them to preserve jobs, renew investment, and begin to grow once again.”