Local business owner, Greg Bowen of Bo's Pallets, said he breathed a sigh of relief when he heard the news that his taxes would not increase as a result of the $858 billion agreement. He added that the tax cut deal, officially known as The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, has come at a critical time for Americans and small businesses.
"I think [the tax cut deal] was critical. We're at a tipping point and we're tipping back the way we need it to but they could very easily push this the other way," Bowen said. "This is a complicated economy and it takes a lot of different layers of things going together to really turn the business around. So these are good steps forward, no doubt about it."
At the Georgia Highlands College Advisory Council meeting held earlier this month, Professor of Economics Dudley Salley, Ph.D., warned of implications if tax cuts were allowed to expire.
"If we appeal to the laws of economics, the Keynesian Theory says that if you raise taxes that's going step on the brakes. So if you let the Bush tax reductions that were made in 2001 and 2002 expire, that's the same thing as raising taxes and that's pouring gasoline on a fire," Salley said. "This is not the time to raise taxes."
The compromise, proposed by President Barack Obama, received bipartisan approval passing the House with a vote of 278-144 just before midnight Thursday. Many outspoken Democrats were disappointed with the act for its inclusion of the wealthy and impact on Social Security while others including Senate Majority Leader Harry Reid, D-Nev., applauded the compromise.
"It will create jobs, it will grow the middle class, it will be good for our economy, it will increase Gross National Product by 1 to 1.5 percent," Reid said in a video statement on his website. "Overall, there's a lot more good in this bill than bad."
The estimated tax increase for a typical working family would have been in excess of $3,000. With those increases avoided, the bill also extended other previous growth incentives. The Child Tax Credit, Earned Income Tax Credit, American Opportunity Tax Credit, the "1603" Renewable Production Credit, R&D Tax Credit and Empowerment Zones were extended for two years. Unemployment benefits will also be extended for 13 months.
"With small businesses not having to pay a tax increase -- that will be hugely beneficial for any small business owner including those in this area," said Josh Brock, Business Development Manager for Century Bank. "The overall positive nature of this tax deal will be not having a tax increase in a market with ever-shrinking profit margins. ... Especially since the landscape of Bartow County is small business, that's a big deal."
Other inclusions within the bill will add to the individual impact seen by families and businesses alike. An approximately 2 percent employee-side payroll tax cut will provide a total of $112 billion in relief to more than 155 million wage earners.
"That's going to get directly into my employees' pocket and this is folks that will go out and spend it within a week. Most people live paycheck-to-paycheck so this is something that is great for the people," Bowen said. "That's going to help my employees and I like that, especially when you're at no overtime and short hours, that helps relieve some of that pressure on your employees."
Another highlight appreciated by Bowen is the temporary allowance for business owners to expense 100 percent of investments to incentivize growth.
Extension of existing tax cuts are set to expire in 2012 as Obama and lawmakers battle for reelection adding pressure to look again at extensions. Obama however defends his party's stance on tax cuts for the wealthy.
"The President does not believe it is affordable to make the high-income tax cuts permanent and will continue to make his case for why we cannot extend these measures beyond 2012," stated an Office of the White House press release.
Advancements made by the Republican party in November may have prompted the president's compromise as he prepares to work with a divided Congress. Bowen emphasized the importance of November's election for small business owners and the need for continued political participation.
"The government we have now seems to be a socialist government that is determined to put independent businesses out of business," Bowen said. "Everything they're doing is against the small businessman and for the large corporations.
"But what's just happened is a sign that maybe we're getting some sanity back in our government."