The small business community and the nation breathed a sigh of relief today as lawmakers reached a bi-partisan 11th hour deal to avert the “fiscal cliff,” while taking significant steps to reduce our budget deficit. However, more work must be done to put our country on a responsible path toward long-term economic growth and fiscal sustainability.
Small business owners have been very concerned about the fiscal cliff and nearly every tax and spending component surrounding it, according to scientific opinion polling Small Business Majority released in November. Specifically, the majority of small employers overwhelmingly agree that tax cuts for the middle class must be extended, but that, in light of our budget crisis and the need to target fiscal policies directly to America’s job creators, tax cuts should expire for the wealthiest 2 percent making more than $250,000 per year. We appreciate the president’s strong stand in support of this policy, but we accept the need to reach a compromise at a higher income level in order to get a deal and avert a fiscal crisis.
We also are pleased with the agreement to permanently fix the Alternative Minimum Tax and maintain other tax provisions that will keep more money in middle class taxpayers’ pockets. And, we are pleased to see that the agreement maintains renewable energy incentives, the R & E tax credit and other business tax incentives, including Section 179 depreciation, while staving off draconian across-the-board spending cuts. But, we are disappointed that a key policy that small business owners strongly supported—the extension of the temporary payroll tax cut—was not included in the final agreement. By more than a 3:1 ratio, small business owners said they are worried about employee payroll taxes going back up.
This is a necessary stop-gap measure. But, it defers important decisions about our nation’s fiscal future. We now urge Congress to come together to address other vital long-term tax policies, including corporate tax reform, and take other important action to balance the need for long-term deficit reduction with targeted policies designed to ensure that our fledgling economic recovery continues. Our elected leaders need to put the needs of the American people over politics and do what is right for the economy and the nation.