Stop the Fiscal Cliff while Preventing Tax Hikes

Going over the fiscal cliff would result in tax changes that are detrimental to small businesses.

Editor’s Note: The opinions expressed are those of the writer. Latin Business Today strives to provide a forum to exchange ideas and viewpoints.

No new taxes and economic certainty were the watchwords I heard while talking with Hispanic business owners about the state of the economy and the ominous fiscal cliff. Ironically, Congress could provide just that if it could come up with an agreement that prevented a $500 billion tax hike in order to stop the fiscal cliff. Unless Congress acts, a number of aspects of the tax structure would change. These changes would include several taxes specific to the business community among them the expiration of the payroll tax holiday and business expensing. What’s more, an agreement would provide economic certainty to not only business owners, but also the investors watching from the sidelines.

 

Tax and Spend

But if you are to believe the news, currently no deal is imminent and talks are stalled mainly over tax rates. After years of reckless spending, Congress is getting the credit card receipt and rather than working to reduce our $16 trillion debt, some are calling for higher taxes so the spending binge can continue.

Tax increases won’t solve Washington’s spending problem. Need proof? According to calculations by The Heritage Foundation’s own J.D. Foster, Ph.D., debt would grow by $9.1 trillion under President Obama’s budget without the tax hikes being discussed, and by $7.7 trillion the tax hikes.

Gustavo Nieves, CFO for the UniComm Media Group and a founding partner for this Hispanic Advertising Agency in Greenville, S.C., told me, “Taxing the top 2 percent of the country stifles economic growth and disincentivizes future investment.” According to Nieves, Hispanic business owners want to grow because they recognize that their growth could lead to employment opportunities for those Americans looking for work.

His observation is also a good reminder that this discussion on taxing those Americans earning more than $200,000 a year in an effort to reduce the deficit is only a distraction from the biggest drivers of our debt—the massive entitlement programs that have grown over time accounting for nearly two-thirds of our federal budget.