Small businesses mildly hopeful about plan

Associated Press

WASHINGTON

Small businesses, the focus of President Barack Obama’s job-creation plan, say they wouldn’t suddenly boost hiring if his proposed tax cuts took effect. But they say his sweeteners could spur companies that were considering hiring to take the plunge — if their sales picked up.

The White House wants to cut Social Security taxes in half next year for the first $5 million of a company’s payroll. Obama’s plan also would eliminate the 6.2 percent Social Security tax on any increase in a company’s payroll, whether from hires or pay raises, up to $50 million. All companies would benefit. But the caps ensure that small businesses would benefit the most.

“That kind of thing ... would definitely be an incentive for us to pull the trigger,” said Tom Schumann, general manager at E.C. Kitzel & Sons Inc., a small manufacturer in Cleveland.

The company is hiring now. But that’s because its machine-tools business is picking up.

“You’re not going to hire someone unless you have a need for that person,” Schumann said.

Other business owners say they would expect to benefit more from other White House policies, such as Obama’s efforts to win passage of several free-trade deals.

Small businesses are normally the leading drivers of job growth. They created 65 percent of net private-sector jobs in the past decade, according to the Small Business Administration.

Newer businesses are even more crucial. Companies less than 5 years old accounted for all the net job gains from 1980 to 2005, according to the Kauffman Foundation, which studies entrepreneurship.