How would local area dealers be affected by lack of a budget deal?

How would local area dealers be affected by lack of a budget deal?

Many observers see Speaker John Boehners pulling of Plan B from consideration as a low point for the Republican/small business cause. The Small Business Legislative Council says it is the best deal small business is likely to get, and now we are likely to return to discussing higher taxes for those earning more than $250,000 instead of the $1 million that was in Plan B.

If there is no deal, says the SBLC, the middle class will suffer. The 2 percent payroll tax holiday will end, most earners will see more tax withheld from their paycheck, and many more middle class taxpayers will owe the Alternative Minimum Tax.

Some economists have said going over the fiscal cliff for a short time wouldnt cause much problem for the economy, and that many of the tax cuts would be restored. But as the SBLC points out, the restored tax cuts may not be any better than whats in Plan B, and that didnt even get to a House vote. Most important, the situation is very different for small businesses in the Washington metro area. While the many government workers here are no doubt glad to have December 24 as a paid holiday, they may well pull back on spending in the face of possible sequestration (across the board cuts to government agencies). President Obama has said that with no deal to avoid the fiscal cliff, furloughs are a possibility for federal workers, though not an immediate one.

It may not be the kind of environment that would inspire bureaucrats to rush out and buy a new car. We will, as always, keep you informed on what continuing developments in the Washington tax policy debate might mean for local area dealers.