Revisiting President Obama's Small-Business Tax Cut Claims

Robb Mandelbaum, The New York Times
President Barack Obama makes a brief appearance at the Democratic National Convention on September 5, 2012.
Getty Images

This summer, the number 18 has crept into President Obama's campaign speeches — as in, "We've cut taxes for small businesses 18 times." (That's from a speech in Melbourne, Fla., earlier this month.) The first lady, Michelle Obama, mentions it, too. And, of course, it came up frequently at the Democratic National Convention a few weeks ago, where it caught the attention of a regular You're The Boss commenter who calls himself Einstein. (No, not that Einstein.)

"Which small businesses had their taxes cut?" Einstein recently asked. "Hate to be skeptical but I know a lot of small-business owners and independent contractors and they never heard of ANY tax cuts. All this talk of helping small business from both political parties sounds like lip service. What are the facts?"

Happy to oblige, Einstein. Back in 2010, when the administration's boast was that it had merely cut taxes 16 times, The Agenda wrote a post about it. Here are the White House's 16 "tax cuts."

From the 2009 stimulus, the Affordable Care Act, and other legislation:

• A new small-business health care tax credit.

• A tax credit for hiring unemployed workers in 2010.

• Temporary extension of bonus depreciation tax incentives to support new investment.

• 75 percent exclusion of small-business capital gains, for stock acquired in 2009 and 2010.

• Temporary expansion of limits on small-business expensing.

• Five-year carryback of net operating losses, available through fall 2009.

• Reduction of the built-in gains holding period for small businesses to seven years, from 10, in 2009 and 2010.

• Temporary small-business estimated tax payment relief. Tax provisions in the 2010 Small Business Jobs Act (both The Agenda and the I.R.S. have published summaries):

• 100 percent exclusion of small-business capital gains, for stock acquired in late 2010 and 2011.

• A further increase to the expensing limit to $500,000 for 2011 (in 2012, the limit falls to $139,000).

• A further extension of 50 percent bonus depreciation through 2010.

• A new deduction for health care expenses for the self-employed in 2010.

• Tax relief and simplification for cellphone deductions.

• An increase in the deduction for entrepreneurs' start-up expenses in 2010.

• A five-year carry-back of general business credits in 2010.

• Lower penalties for failing to report listed (that is, abusive) tax shelters.

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Since then, the president has added two more tax cuts to the list, according to a Small Business Administration spokeswoman, who supplied an update:

• Increasing bonus depreciation to 100 percent for 2011 (from the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, the compromise law that keeps the Bush income tax cuts in place through this year; for 2012, bonus depreciation falls to 50 percent and then expires).

• Tax credits for hiring veterans, ranging from $2,400 to $9,600 (from the Veterans Opportunity to Work to Hire Heroes Act of 2011).

As you can see, some of these aren't tax cuts in the way many people would define them. Rather, they're tax incentives - you've got to spend money (on health insurance, a new employee or new equipment) to save money. Several are improvements or extensions of previous tax incentives. (By that score, some other measures could also be counted as tax cuts, but don't appear on the administration's list - for example, the 2010 Small Business Jobs Act further reduced the built-in gains period to five years for an asset sold in the 2011 tax year.) And, of course, most were temporary, and have already expired.

So has the president really cut taxes 18 (or more) times? We've reported — now you decide.