Will Obama's tax plans bite small biz?
Some entrepreneurs would take a hit if Obama's tax hike on high incomes goes through, but most small business owners would see their tax bills stay the same or shrink. What do you think his administration should do to help small businesses?
From Kiran Parvatrao, Manville, NJ IRS website account for small businesses: Most of the time, small business owners are unaware of the VARIOUS state and federal govts rules and regulations when they start their business. It is not that they do not want file taxes properly/on-time, they are not aware of those things. What I am suggesting to the Federal and State Govt is that they should give us an online account [like bank account]. Where they should tell us [via our own secured account], what filings are due, how much is due, when they are due and any new rules we have to file as well as what taxes we have filed so far. I talked to the IRS person one day about this, she said it is a security issue. When getting money via internet [EFTPS], the security does not arise??? Thanks
From Mary McCarth I agree with most. We have a small recycling business in Florida. Because
products now like paper and aluminum are almost worthless we have been going down the tubes fast in the last 3 months. Our credit score is excellent and the banks don't want to lend money. Guess what. All banks have been given a bailout! We save money and cutcosts and they get the bailouts! No one said life was fair but we played by all the rules, they did'nt!
From Chuck larke Taxes are a minor issue in the scheme of things. GDP comprised of 60% per cent consumer buying is is a relic. American consumers realize consciously or subconsciously, all that stuff cluttering their lives is not necessary and does not make them happier, advertising promotions to the contrary.
In reality a significant number of Americans are going to return to the age when a family member (although not necessarily the mom) will stay at home and bring up their children. This will lower GDP and the tax take.
More people are becoming aware of the WalMarts of the world who by buying trillions of dollars of products made in China and other developing countries based on low prices are in effect creating world affecting pollution elsewhere and somehow messing up the value of our dollar at the same time.
Americans are discovering all the stuff in mini-storage are a burden as is half the things stored in cupboards and garages. What is more important to us is what kind of world are our children facing.
From Mike Downers Grove , Illinois bring back income averaging
From Paul South Florida Small Business needs to streamline operations and reduce the amount of unsold,dead-stock merchandise that is costing money to store and is increasing taxes on inventory. By reducing this inventory,businesses can restock on demand with current,fast selling merchandise. Avoid the liquidation companies as you will only get pennies on the dollar for your stock,bringing your total losses to almost 100% after taxes and other costs. A better avenue is to locate another business owner that wants this merchandise, as they can sell it rapidly in their market(ie: a South Florida merchant sells winter coats to a business up north.) The seller reaps a higher return over liquidation and the buyer gets a discount over purchasing from a vendor or factory for the same items.
To reach these businesses that are looking for your dead-stock visit http://www.sellmyinventory.com and advertise to thousands of businesses all over the country.
From Joe Pitts Cullman,AL Again OUR people in Washington think the only people who need help are the ones that created this mess and made millions.WITHDRAW all bailouts ,give this money to the people who own the money to pay off loans-that will give money to FANNIE and FREDDIE and AUTO MAKERS and they can sit on that. Small bussiness is hit with every type of tax and fee mankind can think of and they still want more , with no thought of the number of people that are paid to do this work. There is NOT one person in Washington that should be reelected Put REAL people in office and for only one term. Again on the bailout guess who will be next in line CREDIT CARD COMPANIES.
From C MARR, GAINESVILLE, GA Two things I would like to see our government consider:
1). New concept: All-inclusive study on 'Fair Tax' concept.
Remove the political agendas and allow U.S. Citizens decide for themselves if the 'Fair Tax' is truly FAIR!
2). Reduce spending moving toward a balanced budget.
Don't worry about making more revenue from taxes, learn to focus on maintaining within Normal-Acceptable Accounting Practices. Kinda like every household across America has to do!
From Pete from Dallas Withholding Withholding
We are faced with the clinical definition of insanity – "doing the same thing over and over and expecting different results." Why we thought that the congress, which could not provide oversight and had just gone though hearings on cutting pork could manage a multi-billion dollar giveaway is beyond me. All they did was to fill the pork barrel one more time and garner IOUs for future campaign donations.
With consumer prices climbing, and uncontrolled congressional spending like this, I fear our biggest problem by this time next year will be “Stagflation”. The problem is that we in business are cutting back because of pessimistic sales forecasts. For those of us who have to make the tough calls, we can’t just continue filling warehouses with product for sales that aren’t happening. After 9/11 we had to get the consumer to spend again and we’re back int hat same situation now. Undeniably, trickle down will ultimately work, in the short term we have to get consumers spending again first.
Obama ran on the basis that he was an agent of change. Assuming that’s true, he needs to use his “executive order” power to put a moratorium on “Withholding tax” for calendar year 2009. This would instantly put money directly into consumer’s hands. No waiting on stimulus checks not postage, just more take home money in every paycheck in America – Instantly – Where it counts. Believe me, if we freed up that kind of money, quickly, consumers will answer the call.
What would you do if suddenly there was no withholding taken out of your check? While I myself might not rush out and buy a car or another house, I’d probably add the money to my retirement plan that might just keep me from becoming a ward of the government in the future.
From Cheryl, Huntsville, AL 1) Why not streamline and make SBA loans more accessible to small businesses…as it stands, the paperwork and hoops you have to jump through are an absolute nightmare!
2) City, County, and State governments should give small businesses the same incentives and tax breaks as they do larger corporations to expand and create jobs. Gee, I'd love not to have to pay sales tax, ad valorem tax, or property tax for one or five years in order to recoup my start up costs like some of the deals that larger corps got to be lured into opening up in our area.
3) Streamline the licensing processes and lower, or better yet, get rid of licensing fees. It's just backdoor tax anyway. I had to pay a licensing/permitting fee for my hot water heater, for crying out loud!
4) Penalize banks severely that got a bailout from the government for hoarding the money and not opening up lines of credit to small businesses.
5) Shoot, while were pipe dreaming, why not give every small business that's been in business at least 10 years an automatic 50K government backed credit line as a small business bailout?
From Pete Glennon, Greenville SC Pete from SC here. Thanks for the support. But why limit the amount you can build in RE? I guess you're saying that it should be spent on growth once the debt is gone or at a reasonable level. But businesses are going to do that anyway if they have the cash. The point is to keep Uncle from peeling off taxes on the working capital that stays in the business. To keep the owner from loop-holing the system you could prohibit loans from the corp to the owners so they in effect get the untaxed portion in their personal accounts.
From A Maier Ohio Nothing. Someone who has worked for gernment-funded entities has NO idea about the risks and sacrifices we make as small business owners. In our world, there are no guarantees, you have to work EFFECTIVELY to get paid, and you can't just force people to pay you more when you are short on cash.
From Pat Conroy, Austin, Texas Pete in SC and Frank in VA are on the right track. What most people don't understand is that the feds are taxing working capital, not just income.
Here is my proposal:
Small businesses create most jobs, so do something that encourages job creation by small business.
1. Define small business at whatever level necessary (gross revenue less than $5MM, $10MM, $25MM?).
2. Keep (or even raise) the current top bracket
3. Exclude from income definition profits that are not left in the company as working capital (i.e., not distributed to owners).
4. Limit the amount that can be retained as working capital (and therefore not subject to income tax) to some multiple of total monthly payroll (12 months, 18 months, 24 months?).
This would create the biggest job-creation juggernaut the US has ever seen. From a political standpoint, the party that comes up with a plan along these lines would instantly win 85% or more of the votes of all small business owners.
From Marc Atlanta, GA Why are we increasing taxes at all on businesses. Obama wants to create jobs but he wants to tax the very organizations that create jobs. Very counterproductive. Enact the Fair Tax and our country would prosper like never before. No more lies indicating it is a 23% sales tax when it is not! Do what is good for the country not what you think will get you votes so you can get re-elected. You can not strenghten the weak by weakening the strong which means you will not be helping the poor by taking from the rich, you only keep enabling them to be poor.
From David Frantz It's not worth it anymore!
Federal tax 30 % more with alt min tax, 15 % FICA TAX , 6% plus in state income TAX then another 8 % in other TAX money grabs such as FUTA SUTA, property TAXES regulatory fee's, permitting fee's, Gross receipts taxes, sales taxes on asset purchases and upkeep, use taxes, fuel taxes, on and on and ON!
THAT'S almost 60 % in TAXES STOLEN from ME…and other small business owners!
NO BAIL OUT for US….. WE get to PAY for it!
Got my rear out of total debt and I have cut WAY BACK and will only work one or two days a week if EVEN THAT!
I will NOT purchase anymore assets and I will NOT expand!
NO Christmas shopping for ME as my wife and I quite doing 'Christmas' 24 years ago!
I have PLENTY of work enough to HIRE 10 to 15 people…… NO WAY….IT'S NOT WORTH IT!
I am NOT going to provide EMPLOYMENT only to be made a FOOL of at the end of they year with almost 60 % of MY hard earned efforts STOLEN from ME in TAXES!
The REWARD is GONE!
From steve wertzbaugher the government needs to make mortgage money available at lower interest rates for first time or low income buyers. this would help stimulate the home industry and would allow sellers to reinvest in larger homes ,or free up that money for other investments.Until were willing to help from the ground up were going to be stuck in this economic quicksand for much longer than most government leaders would like to admit.
From Pete Glennon, Greenville SC Some small businesses need to build working capital through earnings. Because my company is an S Corp, all the profit is taxed at my personal rate in the pass through.
I suggest the rates be changed as follows: Tax on profits is at the Cap Gains rate. Company writes check to owner for this tax, which is passed onto Uncle. Any other money, which is non-payroll-distributions is taxed at the difference between cap gains and personal rate for the year in which the distribution was made.
This allows the company to keep more money with which to operate, which keeps them from blowing money at the end of the year just to get a write off and from excessively borrowing from the bank.Companies become more stable through the buildup of retained earnings.
This is more like a hybrid C Corp.But to me it makes sense.
From R Colorado Springs, Colorado Small Business need help with financing. Most have lines of credit or other business loans that they need a lower interst rate. The 5% they are giving banks would be great or a 2% from the govt. would be even better. Since interest is a tax right of it would actually increase their taxable income or that cash they need to increase the business. Some are getting screwed by the same banks that the government is bailing out. Stop funding the banks and help small business!!!!!!!
From Jim Pilgrim, Midland, MI Don't cut all government contracts. Our company (Small Business) works on government contracts now. If those are cut, jobs will be cut. Due to our new contract, we have added 3 jobs in the last 60 days. That is a big step for a small business. We intend to add 4 more jobs in the next 90 days. Government contracts for us create jobs and allow worker training. We train people to do jobs they did not know how to do previously. We also pay above normal median wages for the type of jobs we offer. We offer medical benefits as well. Our plans fit well with the new President-Elect. Keep giving contracts to small business, don't shut us out. It is already hard enough for us to get the contracts that we get.
From Bob The article suggests that if you lower your profit than you won't have to pay additional taxes. While true, this is contrary to the core reason that anyone would tolerate all the risks and liabilities to operate a closely held business. Another issue that the democrats have skipped over is the additional small business tax burden (6.2%) on every dollar earned by employees in excess of the current cap. This will have a hardship effect on engineering/research firms that employ highly compenated personnel.
From Frank, Great Falls, VA Both Obama and the author miss the point. Their is an assumpyion that the pass-through income is the same as "take home income." If my small business needs capital to finance inventory and recievables, make payroll, buy new equipment, etc., take home pay could be much less than the $250,000. So, here we are RAISING taxes on small business that are capital starved already.
Hey Cheryl..ditto from Tuscaloosa, AL..My city license is a big flat fee (+) PLUS .75 of every $1,000. that moves thru my business. The SBA is a waste of time.