Small business outlook for Obama's 2nd term
NEW YORK (AP) — President Barack Obama's successful re-election to a second term is sinking in. No matter who small business owners voted for, the election takes away some of the uncertainty that small business owners have been carrying around. The question now is whether Obama can satisfy those who say he hasn't done enough to help them expand and create jobs.
During Obama's first term, the president pointed to steps he took to help small companies, such as proposing the Small Business Jobs Act of 2010 that cut taxes for small companies and made it easier for them to obtain federally guaranteed loans. These steps have helped some small businesses start their recovery from the recession.
"We've been seeing steady albeit modest growth in the economy since the president took office and we are cautiously optimistic," says John Arensmeyer, CEO of Small Business Majority, an organization that lobbies on behalf of small companies.
Even so, many small business owners are critical of the president's performance. They are anxious about taxes and the bulging federal deficit. Many opposed the health care overhaul and complain that they are being squeezed by excess regulations.
"I've never seen that Obama understands what it takes to be a small business owner," says Lorne Campbell, co-owner of Occasionally Cake, an upscale baker outside of Washington, D.C., who voted for Republican challenger Mitt Romney. He's worried not only about the economy, but also about looming budget cuts that could make his customers forgo the treats his two stores sell. So he has limited his hiring to part-time workers, and doesn't plan to hire anyone full time.
Many advisers to small businesses say companies need to keep an eye on what's happening with taxes and regulations, but they still need to try to expand and grow.
"You should always be looking at maneuvering through an uncertain future instead of saying, 'the future's uncertain and I will do nothing," says David O'Brien, a financial planner in Richmond, Va., whose small business clients include engineering firms and technology companies.
Either way, small business owners should stay on top of what's going on around them and their companies. So now that Obama has won four more years, what can small business owners can expect from Obama on taxes, health care, the economy and regulation? The Associated Press interviewed small business experts and advocates to find out.
No president has a complete say over how much anyone, including small business owners, will pay in taxes. Expect the divided Congress to battle over Obama's request to raise the top tax rate on many business owners to 39.6 percent during 2013. That's the highest personal tax rate, and it affects some small businesses because their owners report their business taxes on their personal returns. Republicans in the House, many who were aligned with Republican nominee Mitt Romney, will oppose that tax increase, and the result may be a stalemate.
"I don't think anything's going to change," says Peter Cohan, a lecturer in entrepreneurial strategy at Babson College in Wellesley, Mass.
But Obama has made a point of proposing tax cuts that will benefit many small companies. He's calling for the corporate tax rate to drop to 28 percent from its current 35 percent. Manufacturers would pay no more than 25 percent. He's also backing more liberal tax deductions for small businesses that invest in new equipment.
"Congress will be more willing to work with the president on these small business-targeted tax policies," Arensmeyer says.
Recent history shows that Arensmeyer may be right. Earlier this year, there was bipartisan support in Congress for the Jumpstart Our Small Business Startups Act. It was designed to help small companies get financing more easily.
Obama's re-election means the health care overhaul will continue to be implemented, but small businesses still have to wait to find out how much it will eat into their profits.
Business Photo Galleriesview all
- 51863Oklahoma tornadoes: The 'Big Dog,' the little boy and the hug that triumphs over tragedy
- 14915Bradley Cooper, Zach Galifianakis, Ed Helms drink in success of 'Hangover' series
- 9511Hobby Lobby argues case before federal judges
- 7908Oklahoma tornadoes: Thunder reverses the role, takes a turn at cheering on the community
- 7474Oklahoma tornadoes: Woman meets the military officer who shared the clothes off his back
- 6783Blake Shelton's "Healing the Heartland" televised tornado benefit set for Wednesday at Chesapeake Energy Arena
- 6733Rock, pop, country acts give talents and time to help Oklahoma tornado victims