The New Year is just around the corner, which means we're mere days away from falling off the so-called fiscal cliff. This impending situation -- created by a vast array of tax provisions set to expire January 1, at the same time that across-the-board spending cuts start to kick in -- could spell disaster for the small business community and our slowly recovering economy.
Unemployment is at its lowest rate in four years, thanks in large part to those small businesses that, in spite of challenges, have thrived in 2012. But if lawmakers and the president can't find a way to avoid plunging over the fiscal cliff, that progress could be reversed -- and small business owners and consumers would be hit hard.
Small businesses are very aware of the dire situation our economy is in and are concerned. Polling by Small Business Majority found nearly 8 in 10 small business owners are aware of the fiscal cliff, and they're worried about practically every aspect of the fiscal cliff they were asked about. They realize how disastrous many of the cuts scheduled to take place could be for our fragile economy and their customer base, the middle class.
A key provision the debate is focused around is tax cuts for middle class families -- those earning less than $250,000 a year. Included in this segment of the economy are 97 percent of small businesses and 98 percent of Americans. Small Business Majority's polling found 86 percent of small business owners support extending these cuts for middle class families.
In entrepreneurs' eyes, these cuts are crucial because of the role middle class Americans play in the overall success of our economy and small businesses. These cuts, along with a number of other tax provisions scheduled to lapse at the same time, put money back into the pockets of middle class consumers. This drives demand for small businesses' goods and services more than anything else. Customers with less disposable income translates into less demand for small businesses' goods and services, meaning their bottom lines suffer, and with them, their ability to hire.
We can all agree the economy doesn't need that. And what we especially don't need is to tumble back into a recession. Yet according to scores of economists, that's exactly what could happen if the fiscal cliff isn't resolved.
For the good of our economy, lawmakers would do well to focus on a compromise that works for the majority of small business owners and American consumers. Small business owners and their customers need fiscal certainty right now. Without it, small businesses will lack the confidence they need to invest in hiring, and consumers will be less likely to spend extra cash at the mom and pop shop down the street.
The following small business groups signed onto this post: National Association for Moms in Business, National Association for the Self-Employed, Small Business Majority and the US Black Chamber, Inc.
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