According to the Washington Post, the discourse on the fiscal cliff has failed to focus on the bigger issue at hand: how to avoid raising taxes on the one vehicle that can get the economy moving – small businesses. Small business lending has yet to fully recover from the Great Recession, with banks currently approving only ten percent of applications. There have been a myriad of alternative lending options to arrive since 2008, but many business owners don’t know about them.
This article postulates that policymakers have failed to realize most small business owners declare their business profits on the owner’s personal income tax return; if their net income totaled over $250,000, the proposed tax hikes could have a dramatic effect on this niche. Another point being overlooked is that this cost will ultimately be passed to the middle class as business owners raise prices on goods and services, and possibly lay-off or stall hiring.
“Whatever policymakers decide, they must avoid further stifling the small business community,” the author concludes, “If banks tighten up even more than they already have because of decisions made by Washington, we will not only see growth capital disappear from FDIC banks, but the capital for businesses to stay afloat will become more expensive by non-bank lenders.”