Reaction mixed on Obama's proposed stimulus for small business

Small business owners and the people who serve them are cautiously optimistic about new proposals from President Obama Wednesday.

In his State of the Union Address the president laid out several ideas to help small companies, to free up credit, reduce taxes and stimulate hiring. Some of the president's ideas are being received well, while others have been met with some skepticism.

One idea that resonates well is the president's proposal to eliminate capital gains taxes on small business. Everyone likes a tax cut, and Blake Shippee is no exception. Shippee runs a Duluth property management company, Shiprock Management, and he said eliminating capital gains would be a great thing for his business.

"Just here in my business, in real estate, it's nice," Shippee said. "Because when you buy properties - and there's a lot of blighted homes in this area - you could buy a property, renovate it, fix it up. And then you could sell that property for profit and eliminate some of those taxes that are burdened on many of the small business owners or investors, and then reinvest some of those monies."

The president's proposals to take money repaid by Wall Street banks and use it as capital behind community banks sounds like a winner to Shippee.

They'll get people working for a period of time ... but when the credit goes the employee goes."

"Because a lot of the banks, the bigger banks, are still lending, but they're lending to people that have more assets and more cash," Shippee said.

Kelly Herstad is a little less optimistic. Herstad's company, United Truck Body in Hermantown, employs a dozen people who sell school buses, snow plows and various models of work trucks. Obama's credit for new jobs might help, but not for long.

"I've been in business for 44 years, our company is 50 years old, and I've gone through at least six or eight of those types of proposals," Herstad said. "They're short term. They'll get people working for a period of time, but many people - employers - take advantage of the situation, and when the credit goes the employee goes."

The same for a capital gains tax cut. It's meaningful Herstad said, but only if it's made permanent. Not many small businesses will be launching new major projects.

"Small businesses, by and large, are not going to become the next Microsoft," Herstad said. "New small businesses are going to stay small and probably support the owner to the lifestyle to which they've become."

The president said in his speech that passing his health care overhaul could also help small business.

Herstad supports it because it can even the playing field between companies like his, which offer health insurance, and competitors who do not.

Yet health care reform is a potential hazard for small business, according to Andy Peterson with the Duluth Area Chamber of Commerce. Peterson said tax credits and investments could be good, but federally mandated health care is a potential cost that could hurt small business.

"It could be a millstone around the neck of small businesses, and by small business anything 200 employees or less," Peterson said. "So if they get saddled with additional costs for health care they're going to hire fewer people."

There's also the question about whether the administration can deliver what the president proposes. Julianne Raymond directs the Small Business Development Center on the University of Wisconsin-Superior campus. She's said the details of the proposals are often quite complex, and the impact is slow to reach the small business people her center tries to help.

"I think the agencies that are asked to implement these plans aren't up to speed," said Raymond. "It's a good idea. It's on paper somewhere, but they aren't up to speed as far as actually putting it into place and actually implementing the programs."

For Raymond, the real measure of success will be what the final proposals look like after they get through Congress.