Business Tax Policy in the United States - What is Needed

What resonated with me in last night's debate was Romney's plan for small business vs. the Obama record and plan. Looking at business sales....

Per BizBuySell, business sales are up 3% in 2012 vs. 2011.  Some of this can be attributed to the threat of the capital gains tax increasing in 2013.  Although the number of sales are up, the average transaction price is down - by much more than 3%.  This can be attributed primarily to economic factors, i.e., small businesses are less profitable and/or buyers have less capital.

What is needed? A long-term pro small business tax policy including a reduced corporate tax rate with fewer favorable tax breaks to big businesses.  Presently, there are very few small business tax breaks resulting in the small business owner paying nearly 35%-40% in taxes on their meager profits; whereas, large businesses, such as GE, pay nearly no tax on billions in profit. Romney is right. Why would anyone start/locate a business in say Detroit and pay 35%+ tax when they can start/locate the business in Windsor, Canada and pay 15%?

Then, when sold, the business in Canada would pay taxes on only 50% of the capital gains at the individual tax rate vs. the soon to be 23% capital gains rate in the U.S. (20% once Bush tax cuts expire in January plus the Obamacare 3%). The highest individual rate in Windsor, Canada is 40%. Therefore, the highest Canadian capital gains tax rate will never be more than 20% and the 20% is only for gains above $78K thus reducing the effective rate even further.

We presently continue to give big businesses huge tax breaks so they can reinvest the savings to start businesses and add jobs in other countries and place the tax burden on small business owners who add jobs here in the United States.  It is obvious why we continue to lose jobs and unemployment is so high. It is primarily policy related and the fix is simple.

This opinion is my opinion and mine alone and does not necessarily reflect the opinion of any colleague, friend, family member, client, or any other group or individual with whom I am affiliated with.


For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.