There is a new budget deal working in Congress that will have large effects on taxes and government spending if it is passed. Congressional leaders Representative Paul Ryan (Republican – Wisconsin) and Senator Patty Murray (Democrat – Washington) came to an agreement on a long term budget deal. If it is passed, this deal would give clarity to owners of businesses on their own economic future and the country’s financial future in the coming years.
According to sources at the Washington Post, this deal will not reduce the national debt but it will affect many small businesses in 4 ways:
Increased Government Spending. The new budget would increase spending by the government and it would repeal some of the 2013 spending cuts. This means that government agencies would have more available money to spend. This is good news for many contractors for small government that lost business in recent months during the spending freeze.
It will reduce the chance of the government shutting down again in the future. One of the top reasons that this budget was important to agree on was so that the government could avoid any future shutdowns. The 2013 government shutdown has cost the national economy approximately $24 billion dollars. It hurt many businesses that rely on government activity and spending for a majority of their business. Consumer confidence was decreased as Americans entered the 2013 holiday season. This budget plan would significantly reduce the chance of having another government shutdown.
Corporate and individual tax rates will not increase. The new budget deal ignored the proposal by President Obama to decrease the corporate tax rate in addition to eliminating all corporate loopholes. Individual and corporate federal tax rates would stay the same. Additionally, the deal would not eliminate corporate loopholes. Corporations will still be able to get tax deductions if they buy corporate jets in addition to many other deductions they were able to take in 2012.
Airfare might increase. If this budget is approved, many business airline travelers will see moderately increased airline tickets. Under the deal, payments for increased federal revenues will be funded by increased aviation and security fees. These fees are paid by the fliers and are used to finance TSA (Transportation Security Administration).
Now the question is whether the budget deal will have enough support for it to pass through Congress. It was praised by President Obama because it was reached under great compromise by the parties. However, many are predicting that the hard-line Republicans are going to try to kill the deal because there are not enough cuts in government spending.