As I travel around our communities, I constantly hear from small business owners that the banks just will not lend, particularly the big banks that got bailed out. Even in these tough times, we know that two out of every three new jobs is created by a small or medium-sized business, and we know that this job growth is being limited by a lack of capital lending.
The problem is that the big banks -- the same ones that demanded a bailout from the American taxpayer in 2008 -- still will not invest seriously in our small businesses. I opposed these bailouts that rewarded failure and kept the focus on Wall Street instead of Main Street. Last year, I voted against the second $350 billion of bank bailouts, and demanded new rules of accountability, including more lending to small business.
Our economic recovery must happen back home on Main Street. We need to support the entrepreneurial spirit of the small business owners who create two-thirds of new jobs in this country. But in order to grow, they need small business loans, which they just aren't getting from big banks. Last week we took two important steps to revitalize small business in America.
On Thursday, I voted for the Small Business Jobs and Credit Act which will provide small- and medium-sized community banks with capital they can, in turn, loan to our small businesses. This Small Business Lending Fund will reward responsible actors and get support to where it is needed most: the small businesses throughout our communities.
Participating community banks will meet new performance-based incentives to make sure they are lending to small businesses. Basically, if they increase their small business lending they pay a lower interest rate, but if their small business lending drops they will have to pay higher interest rates. This program is fiscally responsible and totally paid for. In fact, it gets capital to our small businesses and returns interest to taxpayers.
Last week we also passed the Small Business Jobs Tax Relief Act, which contains two key provisions that I co-sponsored.
First, it will decrease the capital gains tax for those who invest in small businesses this year. Under the bill, investors will pay no tax on capital gains tax on investments in small businesses purchased from March 15, 2010 to January 1, 2011. This simple tax cut will incentivize more investment to shift from large corporations, sometimes overseas, to smaller entrepreneurs back home.
Secondly, it will increase the tax deduction for start-up expenditures from $5,000 to $20,000, allowing small business owners to recover more of their start-up costs and freeing them up to create new jobs.
Too few in Washington understand how serious this jobs crisis is in our American communities, but a few of us have kept fighting for real job growth and traditional accountability. They think we've solved our problems when the Dow Jones hits 10,000, which is why Washington hasn't given sufficient attention to putting our people back to work. I'm glad that my colleagues, including a handful of Republicans, are finally realizing what we in Central and Southern Virginia have known all along: economic recovery and job creation occurs in our small- and medium-sized businesses that provide goods and services, not big banks who swap paper and speculate.
For those of us who have been clamoring about jobs and small business lending, these are long overdue victories for Main Street over Wall Street.