NEW YORK (CNNMoney) -- President Obama has passed 17 tax breaks and credits for small businesses. But when it comes to job creation, they don't add up to much.
The scope of the tax breaks and credits is too narrow, the requirements too specific, and -- in some cases -- the process too onerous to get firms off the sidelines and onto the hiring battlefield.
"It's nice that you announce these things, but the question is how many actually make a difference," said Bill Dunkelberg, chief economist with the National Federation of Independent Business. "If I give you this cash gift in some form through all these tax credits, why would you suddenly desire to go hire somebody?"
Bringing on an employee is a long-term, expensive proposition that a business owner will not undertake unless the new employee will pay for itself in additional productivity, said Dunkelberg. "Getting a tax break doesn't change the value that a new employee brings to a company."
Nearly half of Obama's 17 tax breaks and credits were included in the
Small Business Jobs Act, passed last September. One tax benefit allows small businesses to write off up to $500,000 worth of
new equipment purchases last year and in 2011. And some of the tax credits, like the
break for hiring unemployed workers, have already expired. The
break on health care costs is available for a maximum of six years.
The tax credits, in some cases, are simple and attractive to small businesses, even if they have had limited impact on an owner's decision to get out of bunker mode and start hiring. Increasing the cap on how much a small business can expense, for example, was an especially easy-to-understand tax change, according to Bill Rys, tax counsel for the NFIB.
Others, like the zero capital gains tax on some small business investments, are so specific that they touch only a narrow segment of the sector, said Rys. And then ones like the health care tax credit are just too complicated to be of much use: "The challenge is you have to meet a number of different conditions to get it," he said.
It all comes back to jobs. "The truth is it is pretty hard to trace specific tax policies back to jobs created," said Joseph Rosenberg, a research associate at the nonpartisan Urban-Brookings Tax Policy Center. "There is simply too much going on."
