President Obama announced the raise in taxes in which rich and big businesses will be taxed more than small ones. He extended tax cuts for income below $250,000.
With Congress rush to turn away a series of tax increases and spending cuts due to “fiscal cliff”. Fiscal Cliff is the popular term used for the end of 2012 when Budget Control Act, 2011, terms will go in effect.
The present act was introduced by George w Bush and will expire on 31st December 2012. Obama and his administration have suggested to lower tax rates for small business owners while raising them for wealthier and richer business owners.
Republicans on the other hand, have been pushing towards extending lower tax rates for all type of tax payers. Meanwhile, the WHITE House is quite positive about their decision of changing tax terms while for both rich and small businesses and know that many republicans are also in favor of the decision. But their leaders stand firm in their public opposition to any tax rate increases as part of a fiscal cliff agreement.
Markets are concerned now with the current situation between the congressmen and the republicans, because they believe that falling off the fiscal cliff can create another recession.
“Obama’s proposal would raise about $80 billion in new revenues a year, which would go a long way toward replacing the $109 billion in harsh, across-the-board domestic spending cuts that are set to begin in 2013 unless Congress acts.”
Small business owners should keep an optimistic mind towards whatever the decision is, because this decision will affect 98 per cent of the people, if their taxes are going to go up. Whether businesses are in debt or planning on expansion, decision made at the end of the year will make or break many plans made by small business owners.