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Just a quick word on last week’s election- I’m happy Obama won. It feels good. I liked the McCain of 12 months ago but not what he had become over the last couple months. Don’t get me wrong….I’m not Barrack fanatic or anything but I think that he represents something much bigger than himself. He’s become an icon of sorts. I’m not just talking about race (although that certainly is an important part of it). I’m mainly talking about a change from what has brought us to our current low in American international standing, finances and politics; a sense of hope that can be seen across almost the entire country; and a renewed feeling of pride in what it is to be an American. Hopefully for our and his sakes he can live up to the grand expectations that have already been placed on him. I’m sure it’s only normal if he looked out over the tens of thousands of people at his acceptance speech all crying, hollering, and cheering his name to think ‘Oh Dead God….can I possibly live up to the expectations?”
Only time will tell. One thing I do know is that an Obama presidency is definitely the better one for a small business owner like myself. And while that was not the first thing I put on my list when I cast my vote, it certainly is refreshing that even if he does nothing of substance about the economy, his win seems to have given much of the American public hope that dreams can come true and that things are on the mend. This is something that can’t be discounted because after all, perception is often reality.
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November 15, 2008
I don’t know about Obama being better for small business owners, his proposed raise of capital gains tax rates would hurt small businesses more than large businesses, just because of sheer volume of capital that can raised by a large corporation. Therefore your business is better served living on credit debts than positive balance sheets with if you have high capital gains in a small business. The past 11 years since the 1997 Taxpayer Relief Act has seen a sharp rise in small business growth. Lower capital gains taxes are better for small business creation and growth, while at the same time low capital gains taxes are bad for Large Businesses if their existing tax rate is small and interest rates are low. Large businesses borrow to grow and buy back stocks as collateral and to raise stock prices during such a period when their balance sheets are reflecting losses from growth and this is called stock market inflation. Obama’s policies are likely to stymie small business creation and growth, but they will ultimately stabilize large corporations if the interest rates are raised, less borrowing, less stock buy back campaigns lead to less inflation of stock values, less growth, but a stabilized economy. During such a time small business owners looking to store capital for investment will be forced to put money into savings accounts, t-bills, and government bonds thus having to only pay tax on interest.
It’s not like McCain had a plan either and its unlikely the house of representatives or senate is likely to have a worthwhile plan. Just look at the bailout package that included bailing out movie producers and rum producers as well.
November 15, 2008
Good points but the Obama tax increases only apply to less than 5% of small businesses. You have to have bring in over $250k for the year (which would mean a company valuation of about 1 mil) for that to kick in. If you’re under $250k you get a much bigger cut than McCain’s plan would have brought. Since my small business falls in that category I’d say it’s safe to say that Obama’s plan would be better for my business. When the business gets to the $250+k level I will gladly pay more taxes.
In the end though, presidents aren’t really the deciding factor on something like this. But with an overwhelming Democratic majority now, I’d imagine he won’t have much of a problem pushing his agendas through.
November 15, 2008
That’s just the income tax part you are talking about. I am referring to capital gains taxes which apply to businesses as well as individuals. You currently have said you are holding because of losses now with the stock market, but if you sell those stocks in 2010 if the market rebounds to your buy in levels and you profit then you will pay about 15-20% on capital gains instead of 5% currently.
I will not be to happy with any tax rate cut, tax credit, economic stimulus package at the moment. As they would only destabilize the current situation even more.