Fiscal cliff avoided, but NWI business still not sure about the future
By Teresa Auch Schultz email@example.com January 2, 2013 8:58PM
Speaker of the House John Boehner, R-Ohio, and Rep. Cathy McMorris Rodgers, R-Wash., right, the Republican Conference Chair, arrive at the House of Representatives for the final vote on emergency legislation to avoid a national "fiscal cliff" at the Capitol in Washington, Tuesday, Jan. 1, 2013. (AP Photo/J. Scott Applewhite)
Updated: February 4, 2013 2:50PM
Although Congress reached a deal Tuesday night to stop the country from going over a fiscal cliff, local officials and professionals say remaining uncertainties will continue to hamper economic growth in Northwest Indiana.
The compromise included a tax increase for people making more than $400,000 but did include several tax credits aimed at businesses. Those will help some specific businesses, Mark Maassel, president and CEO of the Northwest Indiana Forum, said, but local business are still scared about investing because Congress did not address several other important issues, such as cuts to government spending and the country’s debt ceiling.
“Certainly it’s important we step forward and don’t go diving off the cliff,” Maassel said of the short-term solution. “But the simple reality is this is creating enormous uncertainty.”
Maassel said local companies want to know just how they might be affected by future deals involving the country’s long-term economic future before they commit themselves to investing in hiring more employees or expanding.
Maassel said some parts of the fiscal cliff deal, such as tax credits for research and development and purchasing new equipment, will help some businesses. But even those tax credits were extended only for a couple of years, and other tax credits were not addressed.
Ronald Colvin, who owns Colvin Concrete in Hobart, said he had to lay off the majority of his 30-plus employees after the recession hit and he’s now wondering if he’ll have to eventually close his business because of all the uncertainty.
“It’s been a tremendous struggle for our business,” Colvin said. “And yet the government continues to go out and spend money.”
Colvin’s business, which provides concrete for new home construction, has picked up a bit in the past six months, he said, but even growth comes with penalties. He is taxed personally on his company’s profits because of the way it’s set up, so if he starts to make more than $400,000, he will fall into the new tax rate of 39.5 percent that was part of the fiscal cliff bill.
Colvin said he wished Republicans would have stood firm against Democrats, whom he accused of creating “class envy.” He said he thinks the government should just get out of the way of business.
Maassel, however, said the opposite is needed: Both parties need to work together to create a long-term solution that will address all concerns instead of creating stop-gap measures that just punt the issues down the road.
“This was, at best, a short-term solution,” he said, adding that people need to encourage their elected officials to work together to come up with an answer.