The looming questions over whether Congress will act before the year-end deadlines has small business owners trying to plan for varied scenarios.
In Colorado Springs, 80 people attended a recent seminar “The Fiscal Cliff” hosted by accountants from Stockman Kast Ryan + Co. Eric Ryan, tax partner, said that before the Nov. 6 election, 20 people had signed up for the seminar. The day after the election, 80 people had signed up.
“I took that to mean there was a lot of optimism,” he said jokingly. The majority of the attendees were small business owners hoping to glean some information that would help them.
Accountants Marilue Beverly and Chris Scovil explained the fiscal cliff and why it matters. The pair gave their best predictions on the Congressional and presidential appetite to make changes to individual pieces of the tax code. However, both said this is a difficult planning season because of the uncertainty.
Nationally, a poll released this week shows nearly eight in 10 small business owners are aware of the fiscal cliff, a series of tax increases and billions of dollars in automatic spending cuts that will take effect on Jan. 1 if Congress and the president can’t agree on a plan to reduce the deficit by year’s end.
A majority of the surveyed entrepreneurs think it’s more important for Congress to focus on creating jobs than reducing the deficit. However, entrepreneurs see eliminating tax cuts that only benefit the wealthiest as one part of a potential solution.
By nearly a 2-to-1 ratio, small business owners believe spending cuts for education, health care and infrastructure would hurt the economy more than a tax increase on the top 2 percent. A majority also believe allowing tax cuts for high-income earners to expire is the right thing to do given the current economic situation, according to results of a national telephone poll of 500 small business owners conducted by Greenberg Quinlan Rosner Research for Small Business Majority.
“Our economy is slowly recovering,” said John Arensmeyer, founder & CEO of Small Business Majority. “Allowing the tax increases and drastic spending cuts that going over the fiscal cliff would trigger would cripple our small businesses and middle class, and with them our fragile recovery.”
Lawmakers need to act now, Arensmeyer said, and give small employers a sense of certainty about what they can expect during 2013.
The poll found more than three-quarters of small business owners are concerned about an increase in the employee portion of payroll taxes, which saves a typical household $1,000 a year, and could lead to decreased disposable income and demand from customers.
It is estimated that if this 2 percent tax cut is allowed to expire, it could cost nearly 1 million jobs and almost a percentage point of economic output in 2013.
Additional findings include: