Following President Obama’s reelection and the continuation of the current majorities in the House and Senate, we can expect continued difficulty moving initiatives forward legislatively in Washington.
The interests of unions (card check, ambush elections, fragmented units) and employee lawyers will be served in opposition to the interests of employers. That is likely to result in pressures that will keep new hiring to a minimum.
The Affordable Care Act will remain in place, so many employers will be forced to adapt to its mandates, perhaps by moving employment levels below 50 full-time equivalents. Others, who can’t get to or stay at that level, may reduce the work time of their employees.
Continued low interest rates and increasing longevity of workers have combined to make defined benefit retirement plans underfunded, which affects large employers, union-sponsored multi-employer plans and public employee plans, as well as small employers who still have, or participate in, such plans. This is reaching the point of crisis, with participants being denied benefits due to the substantial underfunding. Relief may need to be sought from Congress, if the Labor Department declines to push its regulatory powers that far.
Small business may also need to turn to the divided Congress for help, perhaps right away, to deal with the emerging threats from hackers, cyberspies and computer criminals. We need to protect the nation’s e-commerce infrastructure, but in a manner that does not place undue burdens on small businesses.
Finally, no matter happens with the fiscal cliff, lawmakers are already becoming more aware of the impact of tax changes on pass-through entities. When business owners from partnerships or sole proprietorships use profits to buy a new piece of equipment, they pay taxes on those profits, but they do not have any take home pay.
If the taxes on profits are increased, those owners will have to put less money into the business in order to have enough cash to pay the higher tax. That directly impacts productivity and hiring and economic growth. Bad idea — and it is easy, as a technical matter, to avoid.
I hope our elected officials have the intelligence and sense of responsibility to act reasonably now and into the future. Indeed, that hope applies to a lot more than just tax policy.
Keith A. Ashmus is a co-founding partner of Frantz Ward LLP, a Cleveland-based law firm representing entrepreneurs and employers throughout the nation.