In a surprising show of camaraderie, United States congressional leaders Sen. Patty Murray (D-Washington) and Rep. Paul Ryan (R-Wisconsin) reached a long-term budget deal yesterday that, if passed, would provide some clarity to business owners on their economic and financial situation in the years ahead.
Though it may not avert another debt-ceiling showdown in January—the deal won’t reduce national debt, according to the Washington Post—it would affect small-business owners in four key ways:
Reduced odds of another government shutdown. One of the main goals of Sen. Murray and Rep. Ryan was to avoid another government shutdown. The partial shutdown earlier this fall cost the national economy roughly $24 billion, according to reports, and hurt business owners who rely on government spending and activity for their livelihood. It also hurt consumer confidence heading into the crucial 2013 holiday shopping season. So one good piece of news is that this budget deal would greatly lower the odds of another shutdown that business owners need to worry about.
More government spending. The budget plan would increase government spending and repeal some of the sequestration cuts that took effect in early 2013, meaning affected government agencies would have more money to spend in the months and years ahead. That’s good news for small government contractors who may have lost business due to the spending freeze of recent months.
Individual and corporate tax rates won’t rise. As part of President Obama’s “Grand Bargain” proposal earlier this year, he asked Congress to lower the corporate tax rate to 28 percent for most corporations while eliminating corporate tax loopholes. The budget deal ignored those proposals, according to the Post. Individual tax rates (paid by most business owners, including sole proprietors and pass-through entities like LLCs and S corps) and corporate tax rates would not go up (or down) under the current provisions in the legislation. Moreover, it would not close any corporate tax loopholes—such as tax deductions for buying corporate jets.
Airfares could rise. Business travelers may see ticket prices go up at least modestly under the deal, which pays increases federal revenues by increasing the aviation-security fees that fliers pay to finance the Transportation Security Administration.
The question now is whether the deal has enough support to pass through Congress. President Obama praised it, saying while it “doesn’t include everything I’d like … that’s the nature of compromise.” However, some political pundits predict that hardline Republicans will try to kill the budget deal because it doesn’t cut federal spending enough.
Read more articles on the government shutdown.
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