Payroll Tax Extension? Bigger Issues Loom For Small Businesses
Many in Congress have left Washington, D.C. for the holiday break, leaving the federal payroll tax extension issue hanging. Whether it will be resolved before the December 31st deadline remains to be seen.
For business owners, there is debate over how much it will cost, and how employees will react to a rise in payroll taxes in the new year. But how big a concern is this issue to small business owners? To find out, we did an informal poll of CNBC.com's Small Business Council.
What we heard: Sure, they care about taxes, making sure their employees get a break and that everyone pays their fair share. But the bigger issue is this: The debate has taken up way too much time. Washington needs to focus on bigger issues, such as stemming the out of control deficit, reducing regulation, and incentivizing small businesses to expand and hire.
Bottom line: A payroll tax holiday extension? Would be nice, but there are a lot bigger fish to fry.
Here are some of their comments.
Mitch Free, CEO, MFG.com: Social Security is already massively underfunded, and the debt of our country is out of control. At some point we have to pay our debts. To extend the payroll tax holiday is nothing more than kicking the can down the road. With our ballooning debt, we have no right to be taking tax holidays of any kind. Nothing would do more to fix our economy than paying down our debts, so I’m not in favor of an extension, it sends the wrong message.
Beezer Molton, president, Half-Moon Outfitters: I would love to see the payroll tax holiday extended and we would benefit slightly from it; however, it really does not affect business enough to be a hot issue for us. A millionaire's surtax is another potential stalemate issue that could put a drag on consumer sentiment. Targeting the "working wealthy" (those making $750,000 and less) would not work and would be very polarizing.
Larry Mocha, president, Air Power Systems: This payroll tax holiday is insignificant in terms of business taxes overall. I would like to reduce business taxes in a significant way and reduce the burdensome regulations being imposed on business. Business success is the solution to our economic problems and we must find a way to encourage R&D by business and be aggressive but strategic business development.
Businesses should be incentivized to invest in new projects and new development. The regulatory environment is so strict that banks are discouraged from lending due to extensive regulations. If Washington will allow market forces to work, reduce business taxes in a significant way, free up business from excessive regulations, business will be free to create jobs, which will increase the number of taxpayers.
David Greenspon, president, Competitive Edge Advertising Specialty Manufacturing Co.: Any additional taxes on our business do affect our profitability and future growth. There is no doubt that the 2 percent reduction from the employee 6.2 percent FICA tax represents additional income to all workers, which is income. But to make small business pay will ultimately lessen investment funds available for small businesses to grow. I get paid a salary, same as employees, so I would benefit by the 2 percent cut as well, but the additional tax on the business would hurt more.
Cristi Cristich, CEO, Cristek Interconnects: Rome is burning and our politicians are fiddling away on another Band-Aid when what we need is meaningful tax and spending reform that will create sustainable prosperity for everyone. The government is broke, and instead of debate about any bold proposals to put us back on track, we get supercommittees, hand-outs and class warfare.