With customers to care for, payrolls to manage and bills to pay small-business owners have plenty of demands on their time, which often means digging through the tax code to find possible savings isn’t a priority.
But within the sprawling rules of the Internal Revenue Service lie deductions and credits that can help small businesses save money and one credit in particular is in the debating hot seat. In the US, Barack Obama wants to expand a tax credit for these businesses that will enable more of them to offer their employees the much coveted benefit: health insurance. The White House wants Congress to spend another $14 billion on health care reform to facilitate this.
Health insurance is universally appreciated regardless of how generous your country’s national health system is. Employers too appreciate being able to offer health plans – often viewed as an important differentiator in being able to attract the best talent – but it’s a perk currently out of reach for many smaller to mid-sized businesses. The big debate is whether Obama will manage to get this past Congress.
If he pulls this off, it will mean very good news for the small business community in the US when you consider 59 percent of US small business owners polled for the Sage Business Index in 2011 put tax law at the top of the least favourable aspect of doing business in their country. In fact tax law ranked number 1 in this way for 5 of the 10 countries surveyed. Additionally 76 percent overall thought their government did not provide sufficient support and advice.
In this respect Obama is on point in his desire to make changes in this area. One SMB owner in the US said: “Small businesses are the backbone of this country. There is little or no support for the business people in the US.”
Proposals to reduce corporate tax are all well and good – but the proof will be in legislation getting passed. For this to happen, administration and lawmakers will need to work together to enact them. Given confidence in Government is at best on shaky ground, Obama will need to dig deep and pull out his best mediation skills.