What the Fiscal Cliff Resolution Is Good for
BY Gene Marks
The fiscal cliff resolution may or may not help small businesses. But it has at least one very, very good (perhaps unintended) consequence.
The fiscal cliff crisis has been averted!
But wait: No one seems happy. The Democrats want more tax increases. The Republicans want more spending cuts. And small business owners like me are divided. So is this latest solution good for my business? Will it be good for the American people? Is it enough to help the country's struggling economy? It seems like every economic expert's got theories. And they all conflict with each other.
Now, I'm no economic expert. But I do have my theories too. So listen up, because I've come to a very important conclusion: The fiscal cliff resolution may or may not be good for my small business. But it's a very, very good thing for puppies. Yes. Puppies will definitely benefit.
As made clear by this great chart, the latest deal barely makes a dent in paying down the national debt or getting the annual deficit under control. In fact, the Congressional Budget Office says that it actually adds $4 trillion to the deficit. This creates a great deal of fear among the business community because we don't know where these enormous liabilities will lead, and what they will do to the economy, let alone future generations. When people become afraid they look for things that are a comfort to them. Puppies are comforting. Therefore, this deal is good for puppies.
The deal also creates uncertainty for business owners. This is not the end of the argument. More battles are coming: large, promised "sequestration" cuts that could affect entire industries, the debt ceiling, the President's next budget, a potential decrease in the country's ratings with credit bureaus, more political fighting. These arguments will likely result in still more significant changes that will affect our businesses. Unfortunately no one knows what these changes will be or, therefore, how to react, and this makes the business community very uncertain. In times of uncertainty, business owners hunker down, conserve cash and, of course, turn to those things that are true. Everyone already knows puppies are cute and cuddly. Look for more business owners, senior managers, and titans of industry to be cuddling their puppies over the next few months. Like I said: This deal is good for puppies.
The agreement in Congress will raise taxes on those individuals who make more than $400,000 this year. Prior to this, the President wanted to tax those making more than $200,000 year. You know, the rich. Well it looks like some of the "rich" (many of whom happen to be small business owners) won't be subject to a tax increase. Now I know that these rich people love their caviar and expensive cars and big houses with servants and whatnot. And I also know that they love their puppies. So now with a little more money to spend, they'll certainly be able to buy even more puppies (or toys for the puppies they already own). And this is yet another very good thing for puppies. Don't you agree?
But it's not just the rich who are spared higher taxes. The President agreed to lower tax rates on capital gains (15% for everyone making less than $400,000 per year, and 20% instead of his proposed 39% for everyone else), estate taxes (40% after the first $5 million in assets instead of $1 million), and a more equitable way to calculate the alternative minimum tax. Certain tax breaks for businesses, like deductions for buying capital equipment and research and development have also been extended. Yes, I know that payroll taxes are going back up and other tax increases are hitting us this year to fund health care reform. But, all in all, it could've been worse. We'll be healthier too! We'll have a few more dollars in our pockets. And we'll want to exercise and enjoy our more able bodies. And who better to join us than man's best friend, right? So once again: the fiscal cliff resolution is a good thing for puppies.
Doctors were given a reprieve by this new deal too. They won't have to endure those huge cuts in their Medicare payments, at least for another year. Most of the doctors I know are themselves small business owners who run their own practices. And they were faced with making devastating changes to their lifestyles if we fell over the fiscal cliff. But, no worries. Now they can still afford their BMWs, trips to St. Thomas, and...more puppies! Yet another win for the puppy community.
You may not know this but the bill also has a few hidden perks completely unrelated to our budget problems. It extended higher rum excise taxes to Puerto Rico and the U.S. Virgin Islands and provided tax breaks to a wide range of other groups and interests, including motorsports entertainment complexes and mine rescue teams. There are now special expensing rules for certain film and TV productions, tax-exempt financing for the New York Liberty Zone, and an extension of the American Samoa economic development credit. It is a well known fact that puppies absolutely love motorsports, watching late night movies, and frolicking in the New York Liberty Zone. And of course they adore Samoans. Chalk this up as another win for puppies!
But that's not all. Unemployment benefits were extended so people who are out of work can not only have more time to look for a new job, but also be able to relax and play with their puppies when they can't be bothered to look. And the new bill includes a fix to regulations affecting farmers which some predicted could have significantly raised the price of milk. So not only are puppies benefiting from this deal but I'll bet a few kittens are licking their whiskers in relief too!
It may seem to the typical business owner that the recent fiscal cliff solution does nothing to fix the growing deficit. You may think that Congress is once again kicking the can down the road. One may believe that Washington's inability to make hard decisions and confront the country's budget problems will only result in long term harm to the business community and the economy. Or that after all the attention this issue has received this last minute deal is a bit, er, ridiculous. Yes, this may certainly be true. But no one can deny that our leaders have our puppies' best interests at heart. And at the very least we should be grateful for that.
GENE MARKS is a columnist, author, and small-business owner. He oversees the Marks Group, a 10-person technology consultancy to small and medium-size businesses. A certified public accountant, Marks has also worked in the entrepreneurial services arm of KPMG. He writes for The New York Times, Forbes, and The Huffington Post. @genemarks