PRESIDENTIAL ELECTION 2012 : POLITICAL POLICIES AFFECTING SMALL

BUSINESS OWNERS

Governor Mitt Romney vs. President Barack Obama

Overview

This presentation is a comprehensive report comparing President Barack Obama and

Governor Mitt Romney’s policies surrounding small business in the United States. This report

focuses on the tax, health care, and energy policies each candidate is currently supporting

and is an objective analysis of the facts. Determination as to whom is a bigger

proponent of Small Business success will be left to the individual interpreting this data.

ANALYSIS OF TAX POLICIES FOR PRESIDENT BARACK OBAMA AND

GOVERNOR MITT ROMNEY

Taxes

2012 Tax Rates

The year 2012 could be the last year for America's current tax rate structure. Six tax

rates, ranging from 10% to 35%, have been in place since 2003. The Tax Relief Act of 2010

temporarily extended the current tax rate structure through the end of 2012. Tax rates will revert automatically to their pre-2003

levels unless new legislation is passed.

Current Federal Tax Rates

Single Filing Status: 10% on taxable income from $0 to $8,700 15% on taxable income over $8,700 to $35,350 25% on taxable income over $35,350 to $85,650 28% on taxable income over $85,650 to $178,650 33% on taxable income over $178,650 to $388,350 35% on taxable income over $388,350.

Married Filing Jointly: 10% on taxable income from $0 to $17,400 15% on taxable income over $17,400 to $70,700 25% on taxable income over $70,700 to $142,700 28% on taxable income over $142,700 to $217,450 33% on taxable income over $217,450 to $388,350 35% on taxable income over $388,350.

Taxes on Salary and Other Ordinary Income

President Barack Obama: Retain current tax rates for the first four tiers (10%,

15%, 25%, and 28%)

Increase tax rates for top two tiers (singles with income over $200,000 and joint filings with income over $250,000) Rates will increase to 36% and 39.6% respectively

(previously 33% and 35%)

Endorses the Buffett rule which requires households with income greater than $1 million to pay a minimum of 30% in federal income taxes

Taxes on Salary and Other Ordinary Income

Governor Mitt Romney: Reduction of each tax rate by 20%

Extension of the Bush Era Tax Cuts

2013 Federal Income Tax according to each Candidate’s Tax Approach

Single Filing Tax Tier: President Obama Governor Romney$0 to $8,700 10% 8%

$8,700 to $35,350 15% 12%

$35,350 to $85,650 25% 20%

$85,650 to $178,650 28% 22.4%

$178,650 to $388,350 36% 26.4%

$388,350 + 36.9% 28%

Married Filing Jointly Tax Tier:

President Obama Governor Romney

$0 to $17,400 10% 8%

$17,400 to $70,700 15% 12%

$70,700 to $142,700 25% 20%

$142,700 to $217,450 28% 22.4%

$217,450 to $388,350 36% 26.4%

$388,350 + 36.9% 28%

Taxes on Investment Income

President Barack Obama: Retain current 15% maximum rate on long-term capital gains for those

taxpayers with income below $250,000.

The long-term capital gains tax would increase to 20% for those taxpayers with income above $250,000 per year

Retain 15% maximum tax rate on dividends for the first four tax tiers

Increase maximum rate on dividends to 36% and 39.6% on the top two tax brackets

Retain the 3.8% Medicare surtax on investment income for higher income individuals

Taxes on Investment Income

Governor Mitt Romney: Eliminate Federal Income Tax on capital gains,

dividends, and interest collected for taxpayers with income below $200,000.

For those with income above $200,000 the tax rate would be a flat 15%

Medicare surtax on investment income for high income individuals would be repealed

2013 Investment Income Tax according to each Candidate’s Approach

President ObamaLong-Term Capital Gains (Income below $250,000/year)

15%

Long-Term Capital Gains (Income above $250,000/year)

20%

Tax Rate on Dividends (First four tax tiers) 15%

Tax Rate on Dividends (Top two tax tiers) 36%, 39.6%

Medicare Surtax 3.8%%

Governor RomneyLong-Term Capital Gains (Income below $200,000/year)

0%

Long-Term Capital Gains (Income above $200,000/year)

15%

Tax Rate on Dividends (Income below $200,000/year) 0%

Tax Rate on Dividends (Income above $200,000/year) 15%

Medicare Surtax 0%

Deductions and Credits

President Obama: Eliminate "tax subsidies for millionaires that they do

not need" and reduce the value of itemized deductions and other tax breaks for families with income over $250,000.

Deductions and Credits

Governor Mitt Romney: It would pay for other tax-cutting proposals by

"broadening the tax base," which means reducing or eliminating lots of deductions and credits that are currently allowed.

President Obama

Advantages: Buffett Rule should not have a huge effect on small business owners

Very few small business owners earn over $1 million annually, and those who do are likely already paying the 30 percent tax rate, reports the New York Times.

The tax hikes would primarily affect people who earn millions from stock dividends or capital gains.

Disadvantages: Increased tax on Capital Gains

Critics are concerned that increased capital gains tax might deter investment. Small businesses that pay out earnings as dividends are most likely to be affected.

Any sale of a company that earns over $1 million will result in a higher tax rate

Due to these higher taxes, some very successful small business owners may have to rethink their exit strategies and retirement plans.

Governor Romney

Advantages: Tax cuts across every tax tier

Romney’s plan hopes to cut tax rates at every level, which would greatly benefit many small business owners. The top earners would have their income tax levels slashed from 35 to 28 percent, while the lowest tax rate would be reduced from 10 to 8 percent.

Small businesses should always seek out lower tax rates, as less money paid toward taxes means more cash at hand.

Cut corporate tax from 35 to 25 percent, as well as trim capital gains tax.

Disadvantages Tax plan lacks specific details to make conclusive argument for sustainability

These Bush-based tax cuts may not actually help balance the budget. The latest extension of expiring tax cuts cost the country over $850 billion of revenue in the last decade, reports BusinessWeek.

Critics argue that the Romney campaign places too much faith on feedback from tax cuts.

There is no bulletproof correspondence between tax rates and economic growth, and Washington has a questionable track record on investments

ANALYSIS OF HEALTH CARE POLICIES FOR PRESIDENT BARACK OBAMA AND

GOVERNOR MITT ROMNEY

Health Care

Affordable Care Act

President Obama: If President Barack Obama is re-elected, the

Affordable Care Act will remain in place

Governor Romney: If Governor Mitt Romney is elected President in

November 2012, the Affordable Care Act will be repealed his first day in office

WHAT WILL HAPPEN TO HEALTH CARE IF PRESIDENT OBAMA IS RE-ELECTED

Affordable Care Act

Businesses with 50 or more Employees

Beginning in 2014, businesses with 50 or more employees will have a choice: They can sponsor a health care plan for 100% of their employees (even those signed up for government-subsidized health insurance) or pay $750 per worker in penalties to the federal government.

A business might opt to take the penalty and do away with health insurance. Paying the annual penalty might be cheaper. So that would leave the employees uninsured, and they would have to go to state health plan exchanges to buy health coverage that could be more expensive.

The new reforms don’t put any caps on health insurance premiums. Insurers have every reason to hike rates before the new insurance markets come around in 2014 with added competition.

Businesses with 25-49 Employees

The government won’t require companies with fewer than 50 employees to offer health insurance starting in 2014, and therefore these companies won’t have to contend with possible fines like their big brothers.

Firms with 50 or fewer workers would be exempt from coverage provisions, they will still have to contend with rising premiums.

Businesses with less than 25 Employees

Affordable Care Act may bring tax reliefBeginning in 2010, companies with less than 25

employees that pay the majority of health care premiums for their workers qualify for a tax credit up to 35% of their premiums

In 2014, that credit could be as great as 50% of premiums if you arrange insurance via one of the Small Business Health Options Programs, or SHOP Exchanges

The tax break will be dependent on the number of employees employed as well as the average salary

Note for 2011

“In 2011 as a result of the new law, a business will have to report the value of an employee’s health care coverage on W-2 forms. Many companies provide coverage for employee dependents not enrolled in other employer-based health plans up to age 22 or 23; next year, that age limit will rise to 26. All lifetime caps on insurance policies offered through employer-sponsored plans will be eliminated in 2011. Penalties will increase for the misuse of HSA funds, and workers with FSAs and HSAs will not be reimbursed for money used for over-the-counter drug purchases.”

WHAT WILL HAPPEN TO HEALTH CARE IF GOVERNOR MITT ROMNEY IS ELECTED

THE PRESIDENT OF THE UNITED STATES

Affordable Care Act

Governor Romney’s 3 point Plan

If elected, on his first day in office, Mitt Romney will issue an executive order that enables the Federal Government the ability to issue “Obamacare” waivers to all 50 states.

He will proceed to work with Congress in able to repeal the full legislation as quickly as possible.

“In place of Obamacare, Mitt will pursue policies that give each state the power to craft a health care reform plan that is best for its own citizens. The federal government’s role will be to help markets work by creating a level playing field for competition.”

Restore State Leadership and Flexibility

“Mitt will begin by returning states to their proper place in charge of regulating local insurance markets and caring for the poor, uninsured, and chronically ill. States will have both the incentive and the flexibility to experiment, learn from one another, and craft the approaches best suited to their own citizens.”

Block grant Medicaid and other payments to states

Limit federal standards and requirements on both private insurance and Medicaid coverage

Ensure flexibility to help the uninsured, including public-private partnerships, exchanges, and subsidies

Ensure flexibility to help the chronically ill, including high-risk pools, reinsurance, and risk adjustment

Offer innovation grants to explore non-litigation alternatives to dispute resolution

Promote Free Markets and Competition

“Competition drives improvements in efficiency and effectiveness, offering consumers higher quality goods and services at lower cost. It can have the same effect in the health care system, if given the chance to work.”

Cap non-economic damages in medical malpractice lawsuits

Empower individuals and small businesses to form purchasing pools

Prevent discrimination against individuals with pre-existing conditions who maintain continuous coverage

Facilitate IT interoperability

Empower Consumer Choice

“For markets to work, consumers must have the information and the power to make decisions about their own care. Placing the patient at the center of the process will drive quality up and cost down while ensuring that services are designed to provide what Americans actually want.”

End tax discrimination against the individual purchase of insurance

Allow consumers to purchase insurance across state lines

Unshackle HSAs by allowing funds to be used for insurance premiums

Promote "co-insurance" products

Promote alternatives to "fee for service“

Encourage "Consumer Reports"-type ratings of alternative insurance plans

ANALYSIS OF ENERGY POLICIES FOR PRESIDENT BARACK OBAMA AND

GOVERNOR MITT ROMNEY

Energy

President Obama’s Energy Approach

Continued increase in federal standards as they pertain to fuel efficiency of cars and light trucks

Maintain the Environmental Protection Agency’s (EPA) power to regulate carbon dioxide emissions

Seek to reduce greenhouse gas emissions from all fossil fuels

Maintain incentives for “alternative” energy

President Obama’s Energy Approach Continued…

Eliminate the $4 billion/year oil and gas tax breaks

Open more offshore areas for drilling and support drilling on existing leases in the Chukchi and Beaufort Seas off Alaska Maintain the drilling moratorium off the Pacific coast and most of the

Atlantic coast

Undecided about the approval of the Northern Leg of the Keystone XL

Supporter of the use of hydraulic fracturing in drilling but wants to implement federal safety standards

Governor Romney’s Energy Approach

Strip the Environmental Protection Agency (EPA) of the power to regulate carbon dioxide

Restrain the Interior Department from the ability to lease and issue permits for drilling on federal lands and waters, instead relinquishing this power to states, which according to Governor Romney, will issue permits more efficiently and quickly.

Eliminate the production tax credit for wind projects.

Maintain the federal mandate for ethanol use. While not a subsidy, this mandate orders refiners to use minimum amounts of ethanol.

Governor Romney’s Energy Approach Continued…

Open all federal lands and waters for drilling, including the entire Pacific and Atlantic coasts as well as the Arctic National Wildlife Refuge.

Keep tax incentives and tax breaks for oil and gas drilling. These amount to about $4 billion a year.

Approve the Keystone XL pipeline, which would carry oil sands from Canada to the Texas gulf coast, on day one of his administration.

Remove obstacles and EPA regulations that are impeding the development of coal.

A REVIEW OF THE POLICIES DISCUSSED

Summary

Overview

Both Presidential candidates have interesting policies in regard to Tax, Health Care, and Energy. This report has provided the facts

surrounding each one of these policies and how it relates to Small Business owners. The analysis

will be left to the reader. The facts have been established and now as the reader you must

determine which candidate is a bigger proponent of Small Business success in America.

Reflection

The data portrayed in this presentation is an informative selection of policies dictated by President Obama and Governor Mitt Romney as they relate to small business operation. I chose to create this presentation, so

owners of small businesses can easily read into the basic facts each candidate is proposing for this upcoming election. A small business owner or any voter for that matter can quickly glance at this presentation and get

a relatively thorough understanding of the policies dictated by each Presidential candidate. This information will enable the reader to make his or her own determination as to whom they support more in terms of small business practices. With easy to read bullet points and side-by-side policy comparisons, it makes this guide an extremely valuable assessment tool. This is essentially a one-stop shop for statistics and data surrounding the

election. I plan on distributing this presentation around to my friends who currently own small businesses via e-mail. I hope they will pass it on to

their own friends and so-on and so-on. The goal is for this presentation to reach as many small business owners as possible prior to election day in

November 2012.

Sources

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Losey, B. (n.d.). How will obamacare affect your small business?. Retrieved from http://www.billlosey.com/articles/how-will-obamacare-affect-your-small-business.php

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