What a second term for Obama might mean for small businesses
By J.D. Harrison,
President Obama won another four years at the helm of the economic recovery, where he will continue to contend with a sharply divided Congress.
During the campaign, Obama vowed to tailor his second-term policies to the needs of small-
business owners and entrepreneurs, promising to improve access to capital, limit their tax burden and alleviate regulatory headaches to encourage job creation and business expansion.
But will it happen? Here’s an early glimpse of what small businesses can expect:
1Obamacare full steam ahead: The president’s victory quashes the health-care legislation’s biggest remaining threat, and though regulators must still determine how to implement the changes, the law will take full effect as scheduled in Obama’s second term. Changes will include an employer mandate for businesses with 50 or more employees and a tax credit for business owners’ contributions toward employee health costs.
2 A fierce battle over top-end taxes: Obama has refused to extend the George W. Bush-era tax cuts for high-income earners, setting up an important battle with Republican lawmakers, who maintained control of the House. Lifting those top rates would probably increase the tax burden for about 700,000 small businesses, representing about 3 percent of the total. Faced with gridlock on the Hill, the administration has suggested that it may propose a deal that would include Democratic concessions on entitlement program spending in exchange for Republicans’ approval to raise taxes on the wealthiest Americans.
3 Changes coming to corporate and investment rates: The corporate rate will probably fall but not as much as it would have under a Mitt Romney administration. Obama has proposed lowering the rate from 35 percent to 28 percent, whereas Romney had hoped to chop it down to 25 percent. Obama has also said that he will push for breaks for manufacturers. However, he wants to raise rates on income derived from investments.
4 Regulations remain intact: The president issued an executive order requiring agencies to review all regulations and filter out the ones impeding job growth. Romney had pledged to roll back all Obama-era rules, starting with the repeal of the Dodd-Frank financial reform law and changes to the Sarbanes-Oxley financial reporting law.
5Stimulus, spending still on the table: Republicans’ control of the House will probably force the president to make spending concessions in coming years, but it will be nothing compared with the sweeping cuts Romney had proposed. That could be good news for small contractors who rely on federal spending as a main stream of revenue, though Republicans will argue that it will widen the deficit and continue to hinder the broader economic recovery. Romney also adamantly opposed stimulus spending, whereas Obama has invested large sums of federal money in the private sector. And though Fed Reserve Chairman Ben S. Bernanke is expected to step down, Obama’s reelection paves the way for the central bank to continue taking new actions to jump-start the economy.