Business braces for Obama tax changes

2009 Tax Guide

Barack Obama was lucky enough to be elected president and unlucky enough to be elected president in the midst of a nasty economic crisis. Under normal economic conditions – we forgive you if you can’t recall what those are – record deficits and a staggering economy might engender a degree of caution about hiking deficit spending. (Think of the early Clinton administration after the deficits piled up by the Reagan and first Bush administrations.) Thus, in traditional terms, such a scenario would be bad news for the conventional liberal/progressive leader, one who wishes to advance government power by increasing government spending. But these are not normal times. We hope.

So it is that pundits, experts and members of the chattering classes look forward to the Obama era with a unique-in-our-lifetimes combination of fervent hope and near-total confusion. And it must be added that President Obama’s stated policies do little to clarify the confusion. During the campaign Obama promised to deliver “broad-based tax relief to middle class families and cut taxes for small businesses and companies that create jobs in America, while restoring fairness to our tax code and returning to fiscal responsibility.” That’s a tall order, huh? How is all this going to take place? Well, when we drill deeper into the then-candidate’s campaign promises, we find his plan to: “Eliminate capital gains taxes for small businesses, cut corporate taxes for firms that invest and create jobs in the United States, and provide tax credits to reduce the cost of health care and to reward investments in innovation.”

These pledges are particularly significant for Colorado because an estimated 98 percent of all businesses here are small businesses, according to the National Federation of Independent Business, the NFIB. Of course, “If you are in startup mode you’re not generating capital gains,” notes CPA Fran Coet, of Broomfield-based Coet & Coet. As philosopher George Santayana put it, “Skepticism, like chastity, should not be relinquished too readily.” So we asked some professional skeptics for their views of the Obama plan and its possible impact on the Colorado economy. And we kept in mind another quote, this one from David T. Wolf: “Idealism is what precedes experience; cynicism is what follows.” Fiscal/financial conservatives, of course, Obama-nate the Obama-nomic approach. “The danger of his business tax policy is that he does not want to entertain lowering the corporate income tax rates, and it looks as though he wishes to move the capital gains tax return back up to 25 percent, both of which are going to be devastating for the nation and for Colorado,” says Jon Caldara, president of the Golden-based Independence Institute.

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