By Dennis Seid/NEMS Daily Journal
If you’ve grown weary of reading and hearing about the fiscal cliff, then move along. This column will not interest you whatsoever.
Democrats and Republicans can’t agree on much of anything. They insist they’re not trying to push us – or drag us – off the fiscal cliff. They say they’re working hard to avoid the disaster.
Since neither side is willing to budge very much for now, we might just need to check our seat belts and hold on tightly.
But it’s not only Democrats and Republicans disagreeing. Small and big businesses also seem to disagree among themselves.
According to McClatchy Newspapers, business groups are in a bind because some of their members declare their business income through their personal income taxes.
President Barack Obama and his Democratic allies want to see the tax rates raised on people making $200,000 or more. Clearly, for the small business owners who report their taxes as previously mentioned, that’s a big, big deal.
But as McClatchy noted, “big corporations would be unaffected by higher tax rates since they pay corporate income taxes, not personal. They’re rooting for a lowering of the corporate tax rate. They’re not really interested in how small businesses are affected.
“Simply put, what’s good for some businesses is not necessarily good for others,” McClatchy said.
The National Association of Manufacturers, whose members include small and large businesses, doesn’t take a side. But NAM said falling off the cliff would lead us back into a “double-dip recession, and it’s going to set us back about 10 years.”
The Bush-era tax cuts on personal income expire at the end of the month, and Republicans and Democrats say they want to extend them. But the latter want the top 2 percent of earners to revert back to their pre-Bush-era taxes.
That would affect about 4.5 million S corporations whose business earnings are declared as personal income.
Raising the top two rates for individual income above $200,000 and family income above $250,000 would mean higher taxes for about 30 million businesses that pass their business earnings through personal income taxes, McClatchy said.
The 40 percent corporate tax rate in the U.S. is among the highest in the developed world, and big companies have long lobbied for a rate of 25 to 28 percent, in exchange for closing several tax loopholes. With a lowered rate, large corporations say it would make them more competitive.
So in theory, lower tax rates could lead to more jobs or higher dividends for shareholders. Or would it lead to higher pay for executives?
Meanwhile, small businesses still are left with paying taxes one way or the other – they just don’t know how much.
You’ve heard it before, and you’ll hear it again: We’ve got to come up with a solution. A “shared sacrifice” and a “balanced approach” require everyone to contribute, not just a few.
Everybody seems willing to cut somebody else’s program budget but not their own.
Some say falling over the fiscal cliff might be a good thing. Sure – If you want your 401(k) plans, mutual funds and other investments take a dive and risk another recession and higher unemployment.
Don’t think it will happen? I’d rather not risk the chance. I hope Congress and the White House can come to their senses.
Contact Business Editor Dennis Seid at firstname.lastname@example.org or (662) 678-1578.