Chamber Window - Feb. 21, 2010 » Columns » San Marcos Record, San Marcos, TX

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February 20, 2010

Chamber Window - Feb. 21, 2010

The word on the street

By Phyllis Snodgrass President San Marcos Chamber of Commerce The San Marcos Record Sat Feb 20, 2010, 03:11 PM CST

Often I am asked, “What is the word on the street from businesses, these days?” One word probably sums up the sentiment right now: “Uncertainty.”

Uncertainty surrounding federal taxes, health care and the environment has left a lot of small businesses hanging off a cliff in early 2010.

If you were sitting in the chair of a small business owner or a corporate planner, would you jump headlong into new investments and new hiring right now? Or would you wait for some clarity, not to mention some common sense, to take hold first? I think we all know the answer.

Congress finished 2009 without completing work on several major tax issues, including a fix for the expiring estate tax, which hits families and family owned businesses especially hard. On January 1, 2010, the federal estate tax phased out completely. But on Jan. 1, 2011, the estate tax returns, in full force, at the rate of 55% on estates worth more than $1 million.

Near the end of 2009, the House actually passed a bill that would have permanently capped the tax at the 2009 rate of 45%, with a $3.5 million exclusion for individuals, $7 million for couples. But the Senate at that time was focused on passing sweeping health care legislation and did not even take up the bill.

The uncertainty surrounding the estate tax - whether Congress will pass a retroactive bill or do nothing at all - makes it extremely difficult for family owned businesses to plan for the future.

The Senate also failed to act on legislation to stop approximately 50 individual and business tax breaks passed by the previous administration from expiring at the end of 2009, including a tax credit for research and development.

In the environmental arena, the Environmental Protection Agency (EPA) issued an endangerment finding in late 2009 authorizing it to regulate all carbon emissions. Businesses are now delaying plans to upgrade or expand their facilities while they wait to see how far the EPA will go in regulating carbon emissions or how Congress will respond.

Further complicating matters for small businesses, banking regulators are coming down hard on banks whose secured loans are seeing a decrease in value of the underlying collateral. Instead of giving the market time to recover some of the value and working with small businesses to restructure loan payments, thus keeping the doors to business open in America, regulators in some markets are forcing banks to write down the loans or sell the underlying properties, dumping more real estate on already depressed markets across the country and causing more job loss.

Uncertainty gives American businesses little reason to invest. It is slowing our recovery and our growth, and no one is paying a higher price than the American worker. We are fortunate in our region because the job losses and property value decreases are much smaller than what is occurring in other areas of our state and nation. But what affects one, affects all in this global economy. Let's hope Washington starts listening to the business owners and job creators. Businesses aren't the enemy - they are the solution.

The San Marcos Chamber of Commerce is Focused on Business – Focused on You.

Check us out on the web at www.sanmarcostexas.com.

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