Can businesses expect any more surprises in 2011?
Already laboring under the burden of the MTA tax, another unexpected expense arrived recently in the form of an interest surcharge. The state billed employers for a $95-million interest payment due on borrowed federal unemployment funds. The employers”™ payment was required by Aug. 15.
Adding to the problem are concerns about the nation”™s financial stability and resultant reactions on Wall Street.
“There”™s tremendous volatility,” said Howard Klein, a partner with Citrin Cooperman L.L.P. in White Plains. “People are just out and out nervous and concerned about what”™s taking place now and what”™s going to happen going forward. If you aren”™t sure whether to buy or sell, do nothing. History has proven that waiting it out can be the best bet.”
As the state”™s income dwindles and prices and surcharges rise, Klein said businesses are evaluating vendor relationships, seeking to grow their companies ”“ or simply maintain the status quo ”“ but trying to reduce expenses. “There is a lot of competition in the marketplace,” said Klein. “People are extremely price sensitive, but I caution anyone looking for the least expensive vendor not to destroy relationships you have established ”“ times do get better. Businesses need to remain value-driven because it”™s imperative for a client or customer to feel you value your relationship with them.”
As for the political climate, Klein says New Yorkers are “used to dysfunctional government ”“ we”™ve been living with it for so long.” But the CPA expressed faith in the state”™s new governor, Andrew Cuomo. “I think he”™s doing a good job. He”™s shown us that you can push your agenda and get compromise. We need to see that happening at the federal level.”
Klein railed against the MTA tax, where no company ”“ either for-profit or non-profit ”“ is exempt from paying 33 cents on every $100 of payroll. “We bailed out a dysfunctional agency. ”¦ that is unconscionable. Independent public CPA firms audit public companies, but government agencies audit themselves. There”™s no discipline with that kind of structure. Essentially, the MTA mobility tax is just another government bailout of an inefficient agency.”
Klein said more businesses and workers should be fighting the MTA tax more aggressively.
The Bush-era tax cuts for single people making more than $200,000 and married couples making more than $250,000 will come to an end Dec. 31, 2012 unless they are extended. “When people hear about the very wealthy, they don”™t think the break should be extended. But here in Westchester, where the cost of living is one of the highest in the country, a couple earning $250,000 in this region is not unreasonable,” said Klein. “But there is resentment because people see large corporations slipping through tax loopholes. ”¦ but the formula doesn”™t apply across the board.”
And for those companies struggling to determine if they should add staff or reduce expenses, it still makes sense to market and promote your business, said Klein.
“People may be reluctant to do that, especially with the economy in the state it is in, but you need to stay in the public eye. The general rule of thumb is to be prudent, set goals, try to reach them, be reasonable and not lose sight of customer service. Don”™t shortchange them, because when times get better, they won”™t come back to you.”
