Lukewarm Reaction to Bush’s Plan : Small-business owners are grousing about having to adjust their payroll systems to reduce federal withholding taxes, thanks to President Bush’s order to adjust withholding tables to give workers more up-front cash.

But they see benefits in his call for more generous depreciation writeoffs for equipment purchases, lower capital gains taxes, greater tax benefits for real estate purchases and his order for a 90-day moratorium on new federal regulations.

Nonetheless, many small-business owners are taking a wait-and-see attitude toward Bush’s proposals.

“When my small-business clients call me and say, ‘What’s in it for me?’ I’m saying at this point, ‘Nothing, don’t get excited,’ ” said Joe Greenstreet, principal of Broadstreet Business Services in Nevada City, Calif.

Broadstreet, who spent Wednesday reviewing the President’s proposals at a National Federation of Independent Business tax committee meeting, said there is not much business owners can do until Congress responds to Bush’s plan.

“I believe the President is hoping the economy will heal itself and he won’t have to make any changes,” said Greenstreet, who is a professional tax preparer.

Greenstreet said he and other tax advisers will be busy helping clients adjust their payroll systems to meet the changing federal employee withholding rates, which will give employees more up-front income in exchange for smaller tax refunds later.

Cash-starved Southern California real estate developers may be among the first small-business owners to benefit from Bush’s proposed $5,000 tax credit for first-time home buyers.

Home builders, who have been given an icy shoulder by lenders still reeling from the savings and loan bailout, are eager to raise capital from the public. If the credit is passed by Congress, real estate developers could begin making money again and thus could attract investors.

“Right now, we are taking a very hard look at three real estate companies’ initial public offerings,” said Stephen A. Koffler, executive vice president and director of investment banking for Sutro & Co.’s downtown Los Angeles office.

Bush’s plan to make permanent the 20% research and development tax credit will also help technology and health care firms attract capital.

Glendale certified public accountant Carolyn Denny has spent the past few days encouraging her small-business clients to start shopping again for needed business equipment to take advantage of the proposed 15% first-year depreciation for new equipment purchased between Feb. 1 and the end of the year. That would be in addition to the initial allowable deduction of $10,000 a year for equipment now, Denny said.

National Small Business United, which represents about 60,000 small-business owners, praised Bush’s plan, particularly his call to reduce the maximum tax rates on capital gains to 15.4% and to reform the nation’s health care system within the private sector.