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NFIB chief economist Bill Dunkelberg on how small businesses can protect their bottom line as the fiscal cliff approaches.
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And just 31 days left before we go over that -- full fiscal clip.
-- Don Goldberg is chief economist with the National Federation of Independent Business -- -- of what your small business ought to be doing now.
-- director from the bottom line thanks for being with us built the first question I have is what I just decide I can't take the -- -- -- do nothing right now what do you say that.
Well I think that's basically what we see our our business owners out there doing there.
There really unclear about where the economy is going to go with the impact of the cliff is going to be.
When we asked them last about their outlook for business conditions six months that -- like mid year next year.
14% said they thought to be better but 90% said they thought be worse than 23% an all time 37 near record -- said who knows I have no idea -- from ago.
And so the best thing to sit tight.
Now you've got to pick one from these three choices what thing bothers small business people the most okay is it the rate increases that President Obama and the -- want.
Is it the -- don't increase -- but just -- -- so people will pay more that the Republicans want.
Or is -- the spending cuts from government which of those three is the toughest for small -- While I think the most important issue for them is going to be -- the tax rates are going to be.
All good business people make decisions based on after tax returns whether you're looking at a worker you're gonna hire or -- new piece of equipment understanding your business.
You look at the after tax return and and that a course goes down.
As tax rate marginal tax rates go up so I think that's their big issue.
And yet if my marginal tax rate stays the same.
But end up paying a higher tax bill because they capped by deductions are I still like to not -- that welding torch don't get about.
Well that may because that's certainly you know you may be -- one out of the through he -- not look.
Hello Bubba -- tell -- it's no worse thing.
-- were worried about and yet there are some things you say that they can do now you say they should wait on spending but also tell us about changing their tax filing status.
Well one of the things that we're gonna see is as a fairly big difference between the personal marginal tax rates.
And they -- and the corporate tax rates which allegedly -- going to be lowered to make us competitive internationally.
Thus over the past 37 years or so -- we've been collected -- we've seen people switch back and forth.
It cost you money needed changes status but if the difference between the tax rates -- big enough well people do it so we'll see people switching from.
-- partnerships and partnerships and so on into corporate status so they can take advantage of that lower tax rate.
Yet the problem is I think something like two thirds of all the small business profits -- are -- under those personal Rachel go up among the the biggest small businesses.
I heard from -- wealth manager today who said his business a state lawyer businesses are just jam and on business owners that are trying to transfer wealth to their kids to avoid all the new taxes coming -- any your small business guys talk about that.
Well they probably are you know we don't ask him monthly data.
-- information about of that but obviously.
There's a major change you know in the death tax that looks like it's gonna be on the on the horizon you get of five million exemption going down to one million in the rates are gonna go up to over 50%.
So it you know anytime you can make that transfer -- this lower tax rate you're probably gonna take advantage of that.
Yeah and one last thing build uncle Bert.
I think the odds are pretty high that we are you know you look at the lines being drawn in the sand -- the president's campaigning in.
And the proposals don't look like -- negotiable from either side one upside is the only way finally the federal guys on either part it will actually make some real cuts -- they have no choice.
Thanks for being let us build uncle -- --
