Small-business owners and industry representatives told a House committee that the tax breaks in the stimulus package passed by Congress in February have helped some companies.
At a hearing Wednesday before the House Committee on Small Business, Stan Johnson Jr., president of Stans Heating and Air Conditioning in Austin, Texas, testified on behalf of the Air Conditioning Contractors of America. He cited a survey by the groups members conducted three months after the American Recovery and Reinvestment Act passed. The survey found that 50 percent of ACCAs member companies saw a small increase, and 25 percent saw a significant increase, in the sales of qualified high-efficiency heating, ventilation and air conditioning equipment. He attributed that to the expansion of a Section 25C residential energy tax credit in the stimulus bill.
One ACCA member commented that, Without the $1,500 tax credit, we would have had massive temporary and some permanent layoffs. Instead, we have been able to keep steady work during a traditionally slow time, Johnson said in his written testimony. Another member recently commented that in the first five months, the credits provided a big boost to their sales, leading to a 20 percent increase in replacements over the last year.
Charles McMillan, president of the National Association of Realtors and a real estate broker from Dallas, testified about the impact of the First-Time Homebuyer Tax Credit. Historically, between 35 and 40 percent of the home sales in any particular year are purchases by first-time homebuyers, he said. During the first quarter of 2009, however, more than half of the purchases in 134 of the 152 metropolitan markets we track were made by first-time buyers. Moreover, the gradual but steady uptick of existing home sales between March and June of this year suggest a direct correlation between enactment of the stimulus and awareness and utilization of the tax credit.
Congress is trying to monitor how much of a boost the stimulus bill gave to the economy, especially after last months disappointing unemployment numbers showed that some of the governments forecasts for the recovery may have been too optimistic. The Recovery Act targeted $15 billion in tax relief to our nations small businesses, and small firms are already seeing the benefits of those steps, said committee chair Rep. Nydia M. Velázquez. Other Recovery Act measures are generating new demand for entrepreneurs services. Still, we have quite a distance to go, and now is not the time to be complacent. Congress must continue finding ways to help our small businesses through use of the Tax Code.
Douglas K. Woods, president of the Association for Manufacturing Technology in McLean, Va., pointed out that several of the key business tax provisions in the stimulus bill have not done enough to help small businesses, including a one-year extension on the 50 percent bonus depreciation provision for new equipment purchases and enhanced Section 179 expensing on new and used equipment purchases.
Unfortunately, these two tax provisions which were the most important ones for our industry in ARRA were extended for another year just as the economy was free-falling and credit was nowhere to be found, he said. So our companies have been faced with customers who normally might be encouraged by these provisions to invest in equipment, but who either cannot get the working capital to do so, have sunk into loss positions this year and no longer qualify, or who are just too reluctant to make investments until they have a better sense of where the economy is headed.
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