The election is behind us and Congress will hopefully focus on fixing the tax mess we're in. According to the Heritage Foundation, the U.S. is facing taxmageddon, which is a one-year $494 billion tax increase slated to strike the economy on January 1, 2012. What will the tax fix mean for small businesses?
Our tax survey
In mid-October, we conducted an entirely unscientific survey of subscribers to our Big Ideas for Small Business newsletter. We wanted to know whether taxes really matters to you, and in which way. We learned the following.
More than four-fifths (80.6%) of responders said taxes influence their business decisions; only 13.1% said taxes had no impact on their business decisions while the balance was not sure.
For those who said that taxes influenced their decisions, here is how:
- Hiring and firing/outsourcing: 56.1%
- Purchasing/leasing equipment: 66.1%
- Buying/leasing vehicles: 44.6%
- Fringe benefits (including retirement plans, health insurance coverage, etc.): 64.6%
- Legal business structure: 54.6%
When asked "what is the most important tax issue on your mind right now," the answers were evenly divided among uncertainty, high rates, and complexity. One person noted that complexity with compliance has a huge impact on his decisions to hire and grow. Another person said that he is not hiring now due to unknown pending tax changes. Others said that spending, particularly at year-end, is dependent on tax laws.
Of course, not everyone plans their activities on tax results. Some said taxes are only an influence, not a deciding factor. One person indicated that dreams, goals, and self-realization are his driving factors, not taxes. Another person indicated that she focuses on generating income, not worrying about taxes.
If only Congress could know what my readers think!