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I don’t have a crystal ball to foretell the future of the economy and industry in America. President-elect Obama doesn’t either. But it is not hard to see that businesses may tread water during his term. Small businesses potentially face a perfect storm of reduced access to capital, increased taxes on businesses and consumers, capital gains tax increases, sales tax increases, material cost increases, energy cap and trading, and increased regulation. Community service is the new form of entrepreneurship. Wealth creation, business ownership, investing and industriousness are classified as sins. The middle class isn’t part of the working class. And those who invest the most in government are asked to pay their fair share. It will be an interesting four years.
A recent federal GAO report states the obvious: many small businesses don’t pay federal income taxes.
Some people are in a tizzy over this so called finding. Let’s be clear. Businesses pay taxes. Businesses pay payroll taxes. Businesses pay sales taxes and property taxes. The amount of taxes a small business pays would make most people cringe. Income taxes are just one type of tax. Most small businesses will try to offset their losses (expenses) with income so that they don’t have to pay this particular tax. This is Business 101. You would rather invest money back into your business to encourage growth rather than pay it to the government. Generally everybody wins.
