Survey: Taxes On Consumers Big Issue For Small Biz


NEW YORK (AP) â¿¿ Small business owners who are worried about the so-called fiscal cliff are concerned beyond their own finances â¿¿ they're also uneasy about higher taxes on consumers, according to a survey released Wednesday.

The survey commissioned by Small Business Majority, a lobbying group, found that owners are most worried about losing tax breaks that will help their companies, like higher deductions for equipment purchases. They are equally concerned that a 2 percentage point increase in payroll taxes will force consumers to cut spending â¿¿ which will lead to less revenue for small business.

The results of the survey indicate that business owners generally aren't focused on one of the most highly publicized aspects of the cliff, an increase scheduled to begin Jan. 1 in tax rates on individuals earning $200,000 or more or households earning $250,000 more. During the election campaign, Republicans including presidential nominee Mitt Romney contended that small business owners would be hurt by that increase, and that they would cut back on hiring new workers.

The survey questioned 500 business owners, 47 percent of whom described themselves as Republican. Thirty-five percent described themselves as Democrats. Eight percent said they were independent.

The survey was released as Congress, back in session following the elections, is expected to consider legislation that will prevent the fiscal cliff. Lawmakers are sharply divided on the upper-income tax increases. President Barack Obama has said he will veto any bill that gives tax cuts to upper-income taxpayers.

In results from the same survey that were released last month, 52 percent of the participants said that raising upper-income taxes is necessary to help reduce the federal budget deficit.

Payroll taxes were a big concern for survey participants. Seventy-six percent worried that an increase in payroll taxes will force consumers to cut their spending. That in turn will mean less revenue for small businesses. Employees' portion of payroll taxes was cut by 2 percentage points for 2011 and 2012 to help stimulate consumer spending. That reduction is expected to expire Dec. 31 unless Congress extends it.

Similarly, owners were concerned about the Alternative Minimum Tax. The number of households who face this tax, which Congress routinely adjusts to prevent tax hikes on millions of taxpayers, will soar from about four million to nearly 33 million unless lawmakers prevent that from happening. That would also erode the amount of money consumers have to spend. Eighty-one percent of the survey participants said they are concerned about the prospect of the tax rising.

In a conference call Small Business Majority held with reporters to discuss the survey results, small business owner Mike Brey said he was focused on the impact higher taxes would have on consumer demand.

"For the demand to be there, we need to ensure that middle-class taxpayers have more money," said Bray, owner of five Hobby Works stores in the Washington area.

When asked about business taxes, 81 percent of the participants supported a change in the tax law to permanently allow small businesses to deduct up to $1 million in equipment expenses. This deduction, named the section 179 deduction after a federal tax law provision, is scheduled to shrink to $25,000 next year from $125,000 in 2012.

The survey found that owners were concerned about budget cuts in areas like education, health care and the nation's infrastructure. Fifty-seven percent said cuts in these areas would hurt the economy more than taxing upper-income people.

The survey was conducted from Sept. 27 to Oct. 12.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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