Small Biz Owners React to State of the Union

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WASHINGTON (TheStreet) -- President Barack Obama had big ideas for domestic business and entrepreneurship during Tuesday night's State of the Union Address, but several small-business organizations called it a good start short on specifics.

"While there were a few hopeful moments for small-business owners in the president's speech last night, overall our impression is that, when the Obama administration talks about 'business' they really mean big business," National Federation of Independent Business President and CEO Dan Danner said in a statement.

Increasing trade and cutting corporate taxes -- two issues Obama spoke about during the hourlong speech -- are big-business issues, Danner notes. Very few small firms engage in international trade or pay corporate taxes, since they typically file as individuals.

"With no mention of the job-creating power of small businesses, and no proposals to unleash their enormous potential, the small-business community is left with the feeling that the president doesn't 'get' small business," Danner says.

Entrepreneurs and investors are looking for "dramatic changes" in policy, according to SBE Council President and CEO Karen Kerrigan.

"Rhetorically, the president sounded like a pro-business guy. Substantively, concerns remain about the president's desire to increase taxes on entrepreneurs and investors, his energy agenda, new spending and how serious the administration is with regard to regulatory reform and restraint," the Oakton, Va.-based organization said in a statement.

During the speech, Obama did single out for comment an onerous requirement for owners of small businesses: the so-called 1099 provision resulting from the health care reform passed early last year. He repealed it.

"We can start right now by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses," he said when referring to the health care law.

Beginning in 2012, the provision called for business owners to use 1099 IRS tax forms for all transactions greater than $600 each year.

NFIB's Danner stated the provision was "a terrible burden on small firms and never should have been in the law to begin with."

The 1099 repeal was called a step in the right direction, but small businesses have been contentious over much of the requirements and costs as part of the heath care law in general.

The National Small Business Association approved of the speech's themes -- innovation and entrepreneurship -- but cautioned against unintended consequences in corporate tax reforms.

The president's "urging to reduce the corporate tax rate is a positive step, but it cannot be done in a vacuum. Broad reform of the entire tax code is necessary, not just for corporate entities," said Larry Nannis, the NSBA's chairman. "Allowing the smallest businesses to pay a much higher tax on their business income than a multinational, multibillion-dollar corporation undercuts any semblance of fairness."

Obama also singled out significant innovations made by small-business owners over the past year. One example he used was of Brandon Fisher, the creator of the drilling technology that helped free Chilean miners trapped underground for nearly 37 days.

NSBA President and CEO Todd McCracken said he was pleased to see the references to small business. "Given the very early stages of economic recovery the small-business community is just now seeing, this kind of strong commitment to a thriving small-business community is critical," McCracken says.

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