As Congress grapples with whether to prepare and pass a budget, small businesses across the country are continuing to balance their checkbooks, following-up on accounts receivables, and trying to make payroll. It seems a bit unfair that Congress doesn’t have to run the government like a business but expects private enterprise to create the slush fund for the federal government’s spending spree.
Unlike Congress, businesses plan and adjust accordingly to what their books indicate – for example, whether to hire a new employee, purchase new equipment or renovate the office space. Quite simply, if the money is not in the bank, the company will hold-off. In this current economy, businesses are just trying to stay afloat. And let’s be honest – Congress has made it increasingly difficult for businesses to develop their blueprint for the coming year.
The estate tax expired this year – good news for family-owned businesses seeking to pass on the company in 2010. But the bad news comes January 1, 2011, when the “death tax” returns at its pre-2001 rate of 55 percent and $1 million exemption. Although Congress has indicated that it will address estate tax reform this session, to date, nothing has been finalized. Therefore, businesses are left hanging.
Also looming on the horizon is the upcoming expiration of the 2001 and 2003 Bush tax cuts. President Obama has made it clear that the tax cuts for folks above the $250,000 threshold, i.e. “top-earners,” will lapse. And who does President Obama think these folks are that are over the $200-250k threshold that he refuses to give a tax break? Yup, those same folks he gives credit to for job creation – small business owners:
We’re starting with small businesses because that’s where most of the new jobs do. Over the past 15 years, small businesses have created roughly 65 percent of new jobs in America. These are companies formed around kitchen tables and family meetings; formed when an entrepreneur takes a chance on a dream; formed when a worker decides it’s time she became her own boss. And it’s worth remembering every once in a while, a small business becomes a big business, and then changes the world.
All that said, as our economy struggles to recover, is Congress holding off on any new expansions or programs? Not with the recent health care legislation signed into law, which also included another federal government take-over – this time with student loans. The Obama Administration and Congress are spending recklessly while small businesses bear the burden and provide them with the federal government’s slush fund. Is it any wonder why this recession continues to lag and unemployment remains high?
One thing is for certain for small businesses: uncertainty and higher taxes. Without knowing what to expect and preparing for massive tax increases in the coming year, small businesses are unable to adequately plan and focus on what matters most right now – staying in business.