Obama’s Policy Agenda Proposals Part IPosted by Chad Bordeaux
Wednesday, January 21st, 2009
Now that President Obama is officially in office, we want to keep you up to date on the changes that may be coming your way. Keep in mind that none of the below changes have become law yet and must be voted on by Congress. Details are not yet available; however, it is clear that if some of these items are enacted into law they will have a substantial impact on small business owners. Due to the large amount of these Policy Agenda Proposals, I will discuss them over several posts.
Increase the minimum wage: President Obama has proposed to raise the minimum wage to $9.50 per hour by 2011 and index it to inflation. I have never been a fan of the minimum wage. I think people should get paid what they are worth, not some arbitrary amount set by government. This will certainly result in an increase in cost to many businesses throughout the Country. I can only hope that it does not result in an increased number of jobs being shipped overseas where such requirements do not exist.
Making Work Pay tax cut: The details on this are very unclear. Supposedly, it would permanently cut taxes by $500 per person ($1,000 per family). I will keep you posted on this as I hear more details.
Tax cut for senior citizens: Eliminate all income taxation of seniors making less than $50,000.
Reverse certain Bush tax cuts. This proposal would reverse most of the tax cuts for the highest producing tax payers. The Obama proposal mentions the “wealthiest” taxpayers. Unfortunately, the policy makers do not understand that “wealthy” and “high income” are two totally separate things and that having a “high income” does not translate into having more cash for taxes. This will definitely have an adverse effect on many small businesses throughout the nation.
Welfare Credit Expansion. Apparantly “Change” does not mean that the government is going to stop telling the American people the truth. I wrote about this a few weeks ago, asking for then President-Elect Obama to come clean on this lie that the government has been dealing to the American people since 1975. Instead of coming clean and fixing the issue, President Obama has propose to expand the Earned Income Tax Credit (EITC, otherwise known as the Welfare Credit) so that full-time workers making minimum wage would get a benefit of more than three times what they can currently claim. Currently, the maximum benefit is $4,825. So, does this mean that they can get an additional $14,475 handed to them for doing nothing other than filing a tax return. Given the above request to increase minimum wage to $9.50, a full time employee eligible for this credit would earn $19,760 in wage, pay no income tax, and recieve a “refund” for more than $14,475 resulting in a total of $34,235. In addition, President Obama’s proposal calls for this benefit to be doubled if they are paying child support and it would also reduce the Welfare Credit (EITC) marriage penalty. As I stated in my prior post, I am not debating for or against welfare. I am simply debating against lieing to the American people about it.
This topic always gets me riled up, so I am going to stop now. I need to go blow off some steam. I will post some more on the upcoming policy agenda tomorrow – some of it good, some of it bad. In the meantime, if you have any questions about how these proposed changes may effect you – you know where to find us.Chad is a Charlotte CPA who works with small business owners and invidiuals on a monthly basis to provide them with proactive guidance and advice on how to grow their business, minimize their tax liabilities and grow their bottom line. You can find our more about Chad by visiting his profile here: Chad Bordeaux