Moreover, a poll by the National Small Business Association (NSBA) indicated that credit cards are the top source of small-business capital.

That is why it is very timely that the Credit Card Act passed by the current session of Congress came along when it did…right?…WRONG!

It seems the new Credit Card Act conveniently excludes credit cards used for business. This means that credit card companies are free to have their way with small businesses that use their cards. Small business is still prey to the predators of big banks and finance companies.

In fact, in the same poll by the NSBA, 75% of respondents said they had been hit with higher interest rates; 60% said they had received their bills after the due date, and 15% said they had their cards cancelled for no reason, and without explanation.

A small-business owner could use their personal credit cards…except that transfers the liability from the business to the owner—and heaven help you if the IRS ever audits you. It is always recommended to not comingle business and personal expenses.

So, once again, our illustrious members of Congress have stuck it to small business—the very group of businesses that were supposed to bring this country out of recession. Yet, it seems like every time a small-business owner turns around they are being hit with higher fees, unknown additional costs for healthcare, threatened increases in taxes (expiration of tax cuts—or worse), and hidden extra costs like this exclusion from the Credit Card Act.

And everyone wonders why small business is so slow to spend money on hiring people and increasing capacity. Good Grief!

Am I the only one that is concerned about the future of small business?

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Just for a benchmark, this new report tells us that the cost of federal regulations for all businesses has increased to $1.75 TRILLION per year, as of 2008. That number breaks down to $7,755 per employee for large firms (500 or more employees) and $10,585 per employee for small firms (fewer than 20 employees). That is a 36% difference.

Interestingly, it appears from the report that a good portion of this cost is for paperwork required by various federal regulations (and bureaucracies). For many of the regulations there is no differentiation between small firms (fewer than 20 employees) and large firms (over 500 employees). They all have to adhere to the same reporting requirements.

It just seems to me that in the face of our current economy, the bill that was just passed totally missed the boat if the intent was to get small business going in order to improve the economy. Passing a bill to reduce some of the paperwork demanded by federal regulations would have accomplished much more.

In addition, are there any small businesses out there that are not concerned about the cost of the upcoming implementation of the new healthcare reform law in 2014?

Is it any wonder that entrepreneurship in the U.S. is falling behind the rest of the world? Or, does anyone even care?

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However, the “official” unemployment rate of 9.5% remained unchanged. It always amazes me how so many jobs can be lost each month while the unemployment rate improves or remains unchanged. Of course the numbers are “seasonally adjusted.” I doubt that anyone knows what the formula is for seasonally adjusting the numbers, so I always stick with actual numbers.

Which, by the way, are much more representative of reality when we look at the Bureau of Labor Statistics U-6 numbers instead of the U-3 numbers. U-6 includes all unemployed people whether they said they looked for a job in the last 4 weeks or not. The U-6 number puts the unemployment rate at 16.8%.

But, don’t forget, this still does not include those people who did not report that they looked for work during the past 12 months; those who would like to enter the workforce but cannot find a job (new graduates and new immigrants); and those who do not report looking for work because they are in the country illegally. Some studies have put the real number of unemployed closer to 30%. Detroit has reported their actual unemployment rate at around 50%.

The point is; that Washington needs to quit their petty political bickering and get busy working on free enterprise job creation by supporting new businesses, new R&D, new expansions, new capital resources…and stop regulating and taxing businesses—and jobs—into oblivion.

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Senator DeMint’s amendment would limit House members to three terms and senators to two terms. Every lawmaker then could serve no longer than six years in Congress.

“Americans know real change in Washington will never happen until we end the era of permanent politicians,” said DeMint in a statement. “As long as members have the chance to spend their lives in Washington, their interests will always skew toward…amassing their own power.”

Two thirds of the House and Senate as well as three quarters of the states would need to vote for DeMint’s amendment for it to become a part of the Constitution.

Does anyone think this amendment will ever be taken seriously in the foreseeable future?

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Note: Small businesses should pay particular attention.

What Are These Tax Hikes?

Following is a condensed version of a recent article written by Ryan Ellis, Tax Policy Director of Americans For Tax Reform, a centrist organization founded in 1985.

(Condensed version)

In just six months, the largest tax hikes in the history of America will take effect and hit families and small businesses in three great waves on January 1, 2011:

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011 and as a result:

• Income tax rates will rise. The top income tax rate for small businesses will rise from 35 to 39.6 percent. The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.

• Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1,000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

• The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1, 2011, there is a 55 percent top death tax rate on estates over $1 million. [All family owned businesses, especially agricultural businesses, need to plan now for this eventuality—bf.]

• Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

Second Wave: Health Reform Costs

There are over twenty new or higher taxes in the new healthcare laws. Several will go into effect on January 1, 2011. Here is one of the most onerous:

• The “Special Needs Kids Tax” This provision of healthcare reform imposes a cap on flexible spending accounts (FSAs) of $2,500 (Currently, there is no federal government limit). This new cap will be particularly cruel to parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education…which can easily exceed $14,000 per year. Under current tax rules, FSA dollars can be used to pay for this type of special needs education.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

• The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

• Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment today. In January of 2011, all of it will have to be “depreciated.”

• Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

• Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

• Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.

Well, there you are. Unless businesses and individuals alike intervene with their elected representatives, this is what we have to look forward to. So, business owners and individual taxpayers, what do you say, …isn’t it time to let our elected officials know how we feel and what we want them to do in Congress?

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