Good and Bad News for Small Businesses: Taxes, Polls, and the Budget
Small business in America has suffered a difficult recession alongside the rest of the nation. Now, with the recovery underway and economic conditions improving, there’s a great deal of good news on the horizon for small business. Yet there are some grey clouds on the horizon as well.
“Small Businesses have always formed the backbone of the American economy. These entrepreneurial pioneers embody the spirit of possibility,” said President Barack Obama. “The problem is, our small businesses have been some of the hardest hit by this recession. There’s no question that the steps we’ve taken have improved the overall climate for small businesses across the country, but there is more we need to do.”
Given the importance of small businesses to America’s economy, let’s take a look at what recent events and polls have to say about the effects of the changing economic atmosphere and the optimism for this business demographic. In particular, polls have been positive, but the president’s budget proposal was a mixed bag for small-business interests.
Obama’s budget and small businesses
There really isn’t a simple answer when it comes to the budget’s effect on small businesses. For one, the effects of different tax policies and funding changes isn’t universally agreed upon. Republicans tend to predict disaster — probably more than is fair — while Democrats aren’t as receptive to potential pitfalls as they should be.
Looking at the budget, we see this type of disagreement. Forbes tax analyst Kelly Erb argues that some aspects of tax changes could be positive for small businesses, such as upping the cap on deductible expenditures or lightening accounting regulations. Others — like a fee for making risky financial moves — would be opposed because some argue they’re anti-growth.
What’s more, despite the fact that much of the budget is designed to help businesses like these, at the governmental level, funding will suffer based on this budget. According to a Vox breakdown, the biggest winner in Obama’s budget — not counting defense and military departments — was the Department of Housing and Urban Development. The section seeing the most cuts? The Small Business Administration, at negative 22.222%.
Climate change policy and Obamacare
The Obama’s Administration is taking on climate change with new federal standards for flooding areas — something meant to help protect infrastructure and the economy from oncoming negative effects resulting from global warming.
“We know these events are going to come, and we want to be prepared for them,” said Patsy Parker, mayor of Perdido Beach, Ala., to the Washington Post. But some Republicans argue will put undue strain on small businesses. Sen. David Vitter (R-La.) voiced concerns over climate change provisions. “The Administration’s plans could unnecessarily drive up flood insurance rates on small businesses and others across the country,” he said, creating extra costs these businesses can ill afford.
Obamacare is another area where changes could be made that affect small businesses, arguably for the better. Legislation has passed in the House — though how far it will go is questionable — that would slightly change the rule requiring businesses with over 50 employees to provide health insurance. The bill would allow those companies who hired veterans to keep said employees out of the count, meaning they might not be required to pay for insurance, as those veterans would receive health care through the Veterans Benefits Administration anyways. There’s also a suggested piece of legislation that would increase the number of businesses that could apply for an Obamacare tax credit, and the length of time they are allowed to file for it. It’s entirely possible neither would get across the president’s desk, but both might have a positive effect come tax time, or when it comes to increasing a business’s work force.
Positive polling on optimism
Even if changing tax credits and national policy, the current attitudes of small businesses are quite positive, according to Gallup. The Wells Fargo/Gallup Small Business Index is at 71 points and has gone up for two quarters in a row — not to mention it’s the highest it’s been for seven years. On top of that 49% of business owners stated that their revenues had improved either “a lot” or “a little” in the last year.
This positively also extends to other areas of business, including hiring and credit. The self-reported well-being of business owners went up from 21 to 28 points, and “the future expectation component continued to climb to +43, up from +37 in November. Both of these dimensions, like the overall index, are at their highest points since 2008,” stated Gallup. This kind of positivity bodes well for hiring and growth, especially if national conditions continue to improve.
Follow Anthea Mitchell on Twitter @AntheaWSCS
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