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, like 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.
But small businesses have been slower than larger companies to recover since the recession officially ended in June 2009. Surveys show they’re still struggling with poor sales. By contrast, larger corporations have been exporting more, earning more revenue overseas and stockpiling cash.
All that helps explain why job creation has been so sluggish for the past two years. The unemployment rate has been stuck near or above 9 percent for 29 months, the longest stretch since World War II.
Consumers are saving more and paring debt. That’s meant fewer customers for corner retail stores, small manufacturers and local contractors.
In many cases, a tax cut wouldn’t be enough to make up for all that.
“We’re going to hire based on consumer demand, and until demand picks up, I’m not going to be hiring based on a tax credit,’’ said David Hauck, co-owner of Tadpole, a toy store in Boston.
Robert Litan, a vice president at the Kauffman Foundation, said the tax cuts would likely lead some small businesses that were hesitant about hiring to add jobs. But most will want to see sales improve first.
