Posted 02.08.2009

Business braces for Obama tax changes

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One point upon which all experts agreed is that, given the fluidity of the present mess, it’s hard to know what specific policies the new Congress and the new president will pursue. That adds up to uncertainty, doubt, anxiety. Business’ incertitude and anxiousness has two parts, according to Tony Gagliardi, NFIB Colorado state director. One is the conventional concern business owners harbor for the Democratic leadership. “For small business in general things like mandatory paid leave, paid family leave, that always makes us real nervous because somebody’s going to have to pay for that,” Gagliardi says. The second part of his worry has to do with the worry of worry, otherwise known as fearing fear itself. “When you start talking about new programs, there is still a lot of uncertainty, and uncertainty is not a very comfortable feeling for small-business owners,” he says. “The problem is everything is still unknown, but I think we can be pretty safe at this point in assuming that there are not going to be dramatic changes, at least early in the year,” adds CPA Greg Truitt of Aurora-based Holm Ryan Truitt Hall LLC.

“There are still a lot of unknowns,” echoes Washington, D.C.-based NFIB tax counsel Bill Rys. “We’ve seen the focus of tax policy change through the course of the campaign, and then we’ve seen that change even after, so at this point there are still a lot of unknowns as to what types of proposals he may be looking at and if there are changes when those changes might occur.

"The biggest issue right now is that uncertainty: People want to plan for changes in tax code, but you’re not sure yet what those changes are going to be. The driving force right now for all these tax issues is the shaky economy, so, really, until either we see some improvement in the economy or we see what the impact of the stimulus bill is, it’s really hard to get a sense of where the lines are going to be drawn.”

Another point that garners near-complete agreement among economists and other observers is that, whatever the Obama administration’s eventual plans, significant tax changes will probably have to wait for something like economic normalcy. “Nothing is going to be done about the tax issue for probably the first six months, especially anything that looks like a tax increase,” says Vectra Bank Colorado economist Jeff Thredgold. “The things that Obama campaigned on were in the context of a viable economy, which we do not have right now. Priority No. 1 will be economic and financial stabilization. He inherits a mess from Bush and Paulson and Bernanke and Wall Street, and a U.S. economy in its most serious downturn since the Great Depression; plus, a global economy that’s in recession, and confidence that is largely gone, tarnished or damaged in domestic and global financial markets.

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