Package Deal

Entrepreneurs are taking a close look at the Bush administration's economic stimulus plan to determine how it will ultimately affect their businesses. The primary focus of the plan is the speeding-up of the schedule for individual income-tax rate reductions, which were laid out originally in the 2001 tax-cut bill.

The president has said entrepreneurs are heavily represented among those who pay the current top income-tax rate of 38.6 percent. The 2001 bill dropped that rate to 37.6 percent in 2004 and to 35 percent in 2006. The proposed stimulus plan will move the 35 percent rate to 2004. "Individual rate cuts are a powerful stimulant to small-business investment and job creation," says Jerry Jasinowski, president of the National Association of Manufacturers.

Speeding up the individual rate cuts, however, would eventually cost the Treasury $64 billion over the span of 10 years. That hefty estimate is likely to trouble even some Senate Republicans who are already worried about a quickly blossoming federal deficit. Sen. Olympia Snowe (R-ME), chair of the Small Business and Entrepreneurship Committee and a member of Finance, says, "At a time of growing federal deficits, it is especially important that this plan be right-sized-without putting our future at risk."

The proposed plan has only one uniquely small-business provision: Increase the annual allowance for expensing of capital investments from $25,000 to $75,000, and tie the ceiling in the future to inflation. Passage of that proposal looks like a sure thing, as Senate Democrats have the same initiative in their rival stimulus package.

Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.