[Today’s guest blog post is written by Carl Petoskey.]
Watch campaign commercials or the debates and all you’d come away with is that both candidates have the best plans ever for small businesses—as well as being liars who will destroy those same businesses.
How can you know whose plan really is better for you and your company? The talking heads of the 24-hour news cycle seem far more interested in starting fights with each other than actually talking about facts, and even when news outlets do try to talk about the facts, they can’t seem break it down in a clear and concise way.
That’s why we decided to lay out the basics of each candidate’s plan and what experts are saying about them so that you can see for yourself. Let’s start with the challenger:
Romney’s Small Business Plan
As a part of his economic strategy, Romney has a component said to “Champion Small Business.” Here are the points of that component:
- Reduce taxes on job creation through individual and corporate tax reform
- Stop the increases in regulation that are tangling job creators in red tape
- Protect workers and businesses from strong-arm labor union tactics
- Replace Obamacare with real health care reform that controls cost and improves care
What exactly does that mean? Well, first off, he wants a 20-percent tax cut on marginal rates across the board. An independent organization that Romney cited in attacking opponents’ plans has said that this plan will actually raise taxes on most Americans by about $2,000 per year, only really lowering taxes for the very wealthy.
He also wants to cut corporate taxes by a third and move to a territorial tax system, which means, essentially, that foreign income won’t be taxed. This would seem like an incentive for bigger companies to do more work overseas, shifting jobs out of the country. In theory, this could mean that small businesses have a better chance at hiring the best talent—but it could also be harder for them to stay in business at all if the larger corporations are able to work more cheaply due to foreign labor costs.
As for the “increases in regulation” hurting small businesses, he wants to repeal Dodd-Frank (which would help the giant financial companies), initiate legal liability reform so that it’s harder for people to sue businesses if they believe they’ve been harmed by them, and eliminate some EPA carbon dioxide regulations (which would help big oil companies).
Protecting against unions means fighting rules that allow workers to organize and protect against corporate retaliation—essentially, giving more power to the business owners. And he wants to replace “Obamacare” with state-by-state medical plans, though it’s unclear how that would save money or help small businesses.
Obama’s Small Business Plan
The President includes more specifics in a plan that seems to actually focus more on small businesses, but it might be proposals not directly targeting small businesses that more people focus on. He wants to:
- Get your money to you faster by changing laws so that clients have to pay prime contractors within 15 days of receiving proper documentation instead of 30.
- Let you write off more in capital investments next year by extending tax cuts for the middle class. In short, extending would mean you can write off up to $250,000, while not extending would lower the amount to $25,000.
- Make it easier to get bigger loans by streamlining the process (he would remove five unnecessary forms you now have to complete) and raising the maximum from $250,000 to $350,000.
- Simplify SBA disaster loans by changing the online application from what is now 80 screens to a mere 3 or 4.
- Make it easier for entities to invest by changing regulations to encourage community development entities (CDEs) to put money into local businesses.
Of course, all of that sounds great, but the big talking point is the tax increase that Obama wants to put through for people making more than $200,000. He argues that it would only affect somewhere between 3 and 10 percent of businesses. Romney counters that those are the businesses that employ about half of all people working in the private sector, and that the higher taxes will cost jobs.
Which candidate is best for small business?
Both of these claims are true, but a recent Washington Post article clarified what this really means. There’s actually more incentive to fire someone under today’s regulations because the taxes for the highest earners are lower; but under Obama’s plan, that same firing would net the owner less money. In essence, the higher taxes actually increase the likelihood that more people will keep their jobs.
Perhaps the biggest question you have to ask yourself when deciding whether Obama or Romney is better for your small business is this: how much do you make? If, like most Americans, you make under $200,000, then Obama’s plan would seem to help more. However, if you make more than that, Romney seems more invested in protecting your interests.
About the author:
Carl Petoskey has written for the small business industry for over a decade and a half. When he’s not writing, you can find him reviewing Internet providers, among other small business services.
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