December 4, 2012
The “Fiscal Cliff” is political short hand for a number of things that may happen to our economy, some of which could greatly impact small Businesses. It is dangerous because it is made up of several automatic tax increases and lots of automatic spending cuts that could cause another major recession. The major ones are:
· Sequestration: these are the automatic federal spending cuts agreed to last year. If they are not blocked both defense and non-defense spending will be cut $1.2 trillion over 10 years
· The Bush tax cuts: these are the 2002 tax cuts that largely benefit the wealthy, although a middle income tax payer would still see an increase. These tax cuts are set to expire January 1, 2013
· The payroll tax cut: This is the 2% cut in payroll taxes, about $700 for a middle income earner. These are also set to expire January 1.
The national MSA has more information on its website http://mainstreetalliance.org/
The political leadership in Washington DC is working to solve this crisis. While everyone agrees that we should do something, there are major political battles about what to do. The main controversies seem to be whether to end the Bush tax cuts for everyone or just those making less than $250,000 a year and whether to make cuts in social security even though it has run a surplus for at least the last 70 years and is balanced for years in the future. Some politicians also want to end health care reform as part of this grand deal.
The national Main Street Alliance has a sign-on letter about the fiscal cliff for small businesses on line at http://mainstreetalliance.org/
VMSA is putting together a report we plan to send to the General Assembly: SMALL BUSINESS and HEALTH CARE REFORM, Small Business Owners Speak for Themselves. The report will be a collection of interviews or stories from small business people about health care reform in Virginia. We want to get as many interviews as possible so we can show our legislators the importance of health care reform for small business. We are videoing the interviews and some folks are willing to share their stories. You can see some of the video interviews we have already done at http://www.youtube.com/user/
Governor McDonnell is deciding right now whether or not he will implement health care reform in Virginia. Please email the governor http://www.governor.virginia.
There is a federal income tax credit for small businesses that provide health insurance for their employees. The credit will carry over into the future if it is not all used in one year. IRS form 8941 contains information http://www.irs.gov/pub/irs-
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