What the State of the Union Address Means for Business Owners
January 22, 2015
By Kelly Spors
Calls for tax reform and paid sick leave are just a few of the issues small-business owners should pay attention to.
President Obama’s State of the Union (SOTU) address on Tuesday night is expected to highlight the U.S. economy’s revival under his watch and focus on how to reduce income inequality between Americans.
“Because of the incredible grit and resilience of the American people, America is now in a position to really turn the page,” the president said in an online video previewing his SOTU address.
Several of the proposals—if actually enacted by today’s Republican-controlled Congress—could affect small-business owners. What follows are some proposals business owners should to pay attention to:
Raising taxes on wealthy families. The president is expected to renew his call for higher taxes on wealthy Americans in order to reduce income inequality. Last Friday, the White House unveiled a tax-reform plan that Obama will showcase in tonight’s speech. The plan calls for closing “loopholes” that allow people to pass along assets without paying capital gains taxes, thanks to “step-up in basis” rules. Some business owners take advantage of step-up in basis rules when passing along business assets to their heirs in order to minimize the tax implications. The president also calls for increasing the top capital gains tax rate from 20 percent to 28 percent—meaning it will get more expensive to sell appreciated assets. (The plan calls for using the revenue generated from these reforms to give tax breaks to middle-income families and relieve higher education expenses.) Republicans have already dismissed the tax plan, however. “More government, a $300-plus billion tax bill from Barack Obama, is not the formula for this country to succeed,” said Rep. Jason Chaffetz (R-Utah), according to the New York Times.
Giving workers paid leave. The president is calling on Congress to pass a law that would require companies to give their employees at least seven days of paid sick leave per year. Last week, at a small business in Baltimore, the president outlined his plan, adding that 43 million Americans currently don’t get paid sick days. Providing paid leave improves a business’s productivity and reduces employee turnover, he said, according to a video by the Washington Post: “Both large and small companies, it turns out, end up being more profitable in the long term because typically any organization, and certainly a business, is only going to be as good as its people.”
Enacting immigration reform—finally. The president is expected to renew his calls on Congress to pass comprehensive immigration reform—a high-profile issue that Congress has so far failed to compromise on. Many business owners would like to see immigration rules eased in order to allow more skilled workers into the United States.
Even though Obama may have a tough time convincing Republicans in Congress to take up any of these issues, there’s still plenty of good reason to watch tonight’s speech. For one, the president could throw in some curve balls and offer to compromise with Republicans on certain issues. It could also be a key speech for setting certain Democrats’ agenda in the 2016 presidential race, according to Quartz:
Anyone who was in a frenzy about Mitt Romney’s presidential trial balloon should be paying attention to what Obama says now, because the candidates from his own Democratic party will spend the next year alternatively running toward and away from him.
This article first appeared at americanexpress.com
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