“George Washington is the only president who didn’t blame the previous administration for his troubles.”
- Author Unknown
For the next nine months we can all look forward to mudslinging politicians telling us why they are best-suited to lead America, with the topic of taxes playing center stage. Democrats talk about taxing the rich, Republicans want to reduce taxes, and Ron Paul thinks the tax rate should be zero.
The release of Mitt Romney’s tax return focuses the debate on capital gains tax rates, with one side stoutly defending low capital gains rates as a creator of both wealth and jobs, and the other vehemently arguing it as one of America’s great injustices. Regardless of your political beliefs, if you own a business you need to pay careful attention to this discussion because it impacts you.
Do you consider yourself rich? Chances are, even if you are in one of the top tax brackets you don’t consider yourself in the same stratosphere as Warren Buffet or Donald Trump. Unfortunately, proposed changes to the tax code, if adopted, will treat you as such. After 2012, the cost of selling a company will increase – by as little as 20% and up to 100%. Even if the Bush tax cuts are extended, capital gains taxes will increase unless the new healthcare legislation is also repealed; and if the tax cuts expire, they increase exponentially.
If you list the sale of your company as one of your short or mid-term goals, think very carefully about the cost of waiting until after 2012 to sell. For a more detailed analysis of how these proposed changes and other economic factors impact a small business owner, give us a call and we will be happy to discuss how these changes apply to you and your business.