Fiscal Cliff Fallout: What Washington's Deal Means to MSPs

Fiscal Cliff Fallout: What Washington's Deal Means to MSPs

The good news was that the U.S. Congress actually passed a fiscal cliff deal that the president has signed. Wall Street rallied, especially tech companies. The country rejoiced. Briefly. And now as the dust settles on what went way beyond an 11th hour discussion, experts are starting to sift through what it all means for individual tax payers, corporations and small businesses.  Here's a quick look at what we know so far.

The deal looks like it preserved important parts of what industry advocacy and education group CompTIA had asked for in a letter delivered to Washington lawmakers last year. For instance, it preserves the so-called bonus depreciation tax benefit which allows bonus depreciation of 100 percent. In addition, it extends another SMB benefit from Section 179 on small business expensing, enabling businesses to deduct the cost of certain asset purchases, as adjusted for inflation. CompTIA had noted that small business expensing would have been reduced from $139,000 in 2012 to $25,000 in 2013.

You probably already know that the threshold for the bigger tax hike came at $400,000 per individual taxpayer and $450,000 for married tax payers. These taxpayers will pay at a marginal rate of 39.6 percent up from 35 percent.  But everybody will take home a little less money in 2013 as the worker half of the payroll tax cut has ended up to a ceiling of the first $110,100 in income.

As everybody brings less money home, that could affect spending on bigger ticket consumer spending items such as mobile devices (before contract) like smartphones and tablets, potentially providing some short-term relief to managed service providers and other IT workers who have been scrambling to keep up with all the new devices on their networks due to the BYOD trend (bring your own device).  Could the equipment tax deduction mean that IT may spend to issue standard corporate mobile devices, as Level Platforms CEO Peter Sandiford predicts, as consumers spend less, effectively putting the kabosh on BYOD? It's too early to tell, but we'll be watching the potential for a shift here.

The bill included approximately $46 billion in business tax breaks. As the industry continues to sift through the nuances in the bill, we'll let you know how it affects you.

 

TAGS: Growth
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