U.S. budgets can really bring out the passion in people. So much so that it’s no wonder it’s hard for anyone to agree on how Washington should tax and spend.
When it was released on Thursday, the budget President Barack Obama unveiled sparked a war of words all over the capital. The disagreements were so profound, it’s almost as if people were looking at two entirely different documents.
Take the impact of Obama’s budget on small businesses which, like many in the United States, are reeling from the deep economic recession.
“It is not just misguided, but dangerous to raise taxes on small businesses and families that can’t afford to pay,” warned Eric Cantor, the number-two Republican in the House of Representatives.
His fellow conservative, Representative Mike Pence agreed. “The administration’s budget raises taxes on almost every American. America’s hard-working small businesses, family farms…,” he said.
Obama’s budget calls for raising taxes on those with annual incomes over $250,000.
But Robert Greenstein, executive director of the liberal-leaning Center on Budget and Policy Priorities, said not so fast.
“This budget is very good for small business. The claim that it hurts small business…is often repeated but inaccurate.”
Greenstein cited data that only nine percent of people with small businesses have incomes over $250,000 a year. And most of those people, he said, “are wealthy investors who invest in the businesses, not those who operate them.”
Instead of reeling from Obama’s budget proposals, Greenstein said small businesses will fall in love with it.
Among benefits he cited: around 90 percent of small business owners would benefit from Obama’s proposed middle-class tax cuts and they also would revel in the elimination of the capital gains tax for small businesses.
Greenstein also said small businesses would benefit from Obama’s plan to expand health insurance to those who cannot afford it.
For more Reuters political news, click here.
- Photo credit: Reuters/Stelios Varias (Copies of Obama’s budget outline.)
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I HAVE OWNED A SMALL BUSINESS FOR 17 YRS. (S-CORP) I HAVE NEVER HAD A CAPITAL GAIN OR PAID TAX ON ONE. UNLESS THE NEW ADMINISTRATION DECIDES TO GET THEIR COLLECTIVE HEADS OUT OF THEIR -SSES , WE WILL NEED TO HUNKER DOWN UNTIL THE MID TERM ELECTIONS WHEN THESE CLOWNS WILL BE SWEPT OUT- JUST LIKE 1994 . CROSS YOUR FINGERS
- Posted by VINCEI am a small business (S Corp) with 4 fulltime employees and 3 contract workers. I pay income tax on more than $250,000 per year, but the actual money that I personally am able to use is much smaller than that. The money we have available after taxes has to stay in the business account to operate the company. The proposed increase in taxes will definitely affect someone in my position. The economy is also affecting my volume to the point I will have to lay-off at least one fulltime employee and reduce my contract workers by two. If things continue, then I may not be affected by the tax increase because the company income will be reduced. Obviously, if this happens my personal income will be reduced accordingly.
- Posted by David PeeleAnother side effect will relate to health insurance. I currently pay for my employee’s health insurance but if our volume continues to drop I won’t be able to continue doing that. But of course, the federal government will take care of that with the increased tax burden.
This country is in a sorry state, thanks to politicians of both parties. Once these folks are elected to office they seem to forget who put them there.
As someone with experience in the public and private sector, I do not see a problem in the proposal for actual SMALL businesses — I worked in the government for about eight years, in private industry as an employee, an independent contractor, and now as a business owner/employer for well over ten years. Remember the $250K limit is on your personal taxable income not the gross income of the business. If you are over that limit, I posit that either you no longer have a SMALL business (e.g. having over 50 employees may disqualify your business from some SB contracts) or you may want talk to your accountant and attorney about the organizational type of your business. Finally, many small businesses and/or owners (depending on organizational type) that have a capital gain do pay that tax — if you think otherwise, the IRS will probably be paying you a visit.
- Posted by WilliamI’ve made 50,000 a year and employeed 5 people at the same time. If you are making 250,000 per year you are doing okay. More importantly you’re smart, probably hard working and like it or not you are the solution to the problem. The talented productive people will still strive and still earn and still achieve even when unfairly burden by the inequites of the program. You are the solution to the problem and must still be the innovate leaders to counterbalance the greedy, the ignorant and the unfortunate. It has always been so and in times of great strife like these it is more so.
- Posted by LouYes, this is a crock. I’m a physical therapy practice owner and I am disgusted with the new administration’s policies.
I employ 15 people on the books and am hit by higher and higher costs for salaries, benefits (and I do pay out for good insurance coverage for those that qualify), and more government regulation. A higher business tax would only make the burden heavier.
The last 2 years as a PT clinic have not been very profitable. In fact 2007 was a significant loss. That’s the benefit of following government regulations on standards of care “to the T.”
Medicare pays up to a certain limit (below my cost), and has set rates of pay according to skill level required (the RBRVS system). Even though some treatments could be carried out by an aide in the office, MC requires that I use a Physical Therapist (now doctorate education level) or a licensed PT assistant. They pay according to skill level, but only allow the highest level of education for care.
In addition there is a cap per person on outpatient physical therapy each year, but the dirty secret is that it only applies to independent PT businesses. Anyone can cross the street to a PT practice owned by a hospital and have no cap whatsoever. How many ways can they discourage small businesses?
If health care reimbursement or unfair business regulations go any further, I will be forced to stop accepting medicare.
- Posted by B. Herigstad