Businesses and Markets Brace for Obama Administration

With the presidential election just seven days away, the markets and businesses are preparing for an Obama Administration.

The Heritage Foundation, has calculated that in 2008 Congress enacted $332 billion of "emergency" supplemental spending bills, only half of which was for the Iraq war. And Democrats in Congress are preparing for $150 billion to $300 billion in new spending.

Small businesses, which create nearly 80% of the new jobs in the American economy, won’t fair well under Barack Obama’s proposal to send the bulk of their job-creating profits to Washington.

Office of Advocacy at the Small Business Administration has reported that since the mid-1990s, the small business sector has created 78.9% of the net new jobs in the United States. Sen. Obama is claiming his proposed tax hike on incomes over $250,000 will hardly stifle job creation in this key job-producing sector because "98% of small businesses make less than $250,000."

But Obama arrives at his 98% figure by lumping firms with no employees, the majority of small businesses, with small businesses that have 50 or 100 employees (SBA's Office of Advocacy reports that 52% of small businesses in the U.S. economy are home-based). Census data show that 79% of all American companies, counting both large and small firms, have no employees.

What-is-more the tax rate on the lion's share of small business income could reach 54.9% under a President Obama. The individual top rate will climb from 35% to 39.6% and the Social Security/Medicare tax rate could climb from 2.9% to 15.3%. Put those together and you get 54.9%.

But it’s not just small business or Wall Street that is worried, Dolphins owner Wayne Huizenga said this past Sunday no date has been set for selling up to 45 percent more of the team to Stephen Ross, but the presidential election is among the issues weighing on his decision.
That's because a Barack Obama administration is expected to mean higher capital-gains taxes.

"He wants to double the capital gains tax, or almost double it," Huizenga said."Ross purchased 50 percent of the team and Dolphins Stadium for $550 million earlier this year with the intention he would eventually become majority owner if NFL owners approved the deal.
"If you do it this year or you do it next year, the difference is humongous because of the taxes," Huizenga said. (Regardless of when he sells, Huizenga vows to maintain a 5-percent stake in the team.)

The recent volatility in the markets has been due not only to the sub-prime meltdown and credit instability but also to the would-be punitive tax plan under an Obama administration.