Originally created 11/12/06

Small business sees little election change



NEW YORK - Small-business groups anticipate few substantive changes in government policy toward the nation's smaller companies despite the power shift in Congress brought about by the midterm election.

"The issues haven't changed - a lot of the new people elected certainly campaigned on and understand the issues important to small business," said Dan Danner, the senior vice president for public policy at the National Federation of Independent Business, a Washington, D.C.-based advocacy group.

"Fortunately, the issues that affect small business don't have party labels, so we're very hopeful that the new Congress will care about the things that our small-business owners do - available and affordable health care, less lawsuits and fewer burdensome regulations," he said.

Small-business expects gridlock between a mostly Democratic Congress and a Republican White House to help maintain the status quo - something that business owners want.

"This would stagnate some of the changes, and therefore this would be good for the economy," said Carol Kuc, the president of McLean, Va.-based National Association of Women Business Owners.

Still, the advocacy groups do predict some changes in the way the government deals with small-business issues.

Kristie Darien, the executive director of the National Association for the Self-Employed's legislative office, predicted the new Congress will undo some of the actions taken by the Republican-led Congress in recent years.

"We think they'll expand SBA (Small Business Administration) loan programs - they've gotten considerable cuts over the years," said Ms. Darien, whose group is based in Washington. "They'll find ways to strengthen those programs."

A big concern for company owners is the estate tax, whose liberalization under Republican leadership has been opposed by congressional Democrats.

The law currently exempts the first $2 million of an estate from federal taxes, and the top tax rate is 46 percent. Those numbers will continue to change in a small-business owners' favor through 2010, but unless Congress extends the law, they will revert to older and less favorable rates in 2011. If an estate including a business is valued above the law's threshold, an owner's heirs could be forced to sell it or to use life insurance proceeds in order to pay the estate tax.

Smal-business advocates want the more liberal estate tax made permanent. They say small-business owners trying to do estate planning don't know what kind of tax bills their heirs will have to contend with; they don't know whether a family business will be able to stay in the family.

"The chances of having a strong bill have dimmed somewhat in the new Congress," said Todd McCracken, the president of Washington, D.C.-based National Small Business Association, describing small business as "behind the 8 ball" on this issue.

Mr. McCracken said he's hoping that a lame-duck session of Congress between now and the end of the year might pass a law making the more liberal provisions permanent.

Health care costs are one of the most vexing problems facing small-business owners, but so far, they feel there's been little help from Washington to get them affordable insurance to provide for their employees.

It is all but certain that moves to create federally approved association health plans, which would allow small businesses to band together across state lines to buy insurance, will have little future; they have Republican, not Democratic, support and they also made little headway under a GOP-led Congress.

Still, Ms. Darien expects some health care changes. For example, though health savings accounts have been a Republican-sponsored approach to limiting health care costs, the Democrats are more likely to seek tax credits to help small businesses, she said.

While business owners certainly want less government regulation, the advocacy groups don't expect the new Congress to make wholesale changes. As Mr. McCracken said, "Most of the regulations come out of the agencies."

Rep. Nancy Pelosi, D.-Calif, who is expected to become House speaker, has said that a top priority of the new Congress will be raising the federal minimum wage from the current $5.15 an hour. Though businesses tend to oppose an increase in the minimum wage, Ms. Darien and Mr. McCracken said their groups' members tend to pay their employees above the minimum, making that less of an issue for them.