This summer, President Biden presented his 2022 budget proposal, outlining his tax and spending proposals and their effects on the federal budget over the next decade. While the path to passage is a long and winding road, it provides a roadmap for his administration’s priorities. The federal government has already committed $4.5 trillion in COVID-19 relief. At press time, only $3.2 trillion of these funds had been obligated. Will unobligated funds be used to pay for some of his budget proposals?
Whatever the outcome, the 2022 federal budget will impact individuals and businesses. Who will pay, and how much they will pay, will be debated well into the fall. However, the President’s priorities, if enacted, will challenge every business, small and large. Here is a list of some of the targeted tax increases and new public policy mandates directed at the business community.
~ Raising the corporate tax rate from 21% to 28%
~ Raising the top income tax rate on individually- and family-owned businesses from 37% to 39.6%
~ Expanding the estate tax’s reach through repealing stepped-up basis
~ Increasing the top capital-gains tax rate to 43.4%
~ Enacting the Protecting the Right to Organize (PRO) Act
~ Mandating that employers provide a paid sick leave
~ Establishing a new government-run family and medical leave program
As a golf course owner or operator, your bottom line will be affected by this new spending plan. Inflation is already affecting your purchase power. Labor costs will continue to be a challenge moving forward. A recent report by Adam Sacks of Tourism Economics states that we are very close to seeing a 1:1 ratio of employees to jobs. So as the economy continues to expand post-pandemic, wages will continue to rise, adding pressure to green fees, food and beverage cost, equipment, parts and chemicals.
So what steps should we take to manage this unprecedented challenge? Everything starts with your budget. You may still rely on prior years’ operational activities to develop your budget, but applying new quality and cost requirements in your plan will require research. Your vendors are your best partner when forecasting the market. If your supplier cannot provide you the data you need to create a plan for 2022, NGCOA can connect you with suppliers deeply invested in forecasting business costs and providing their services free of charge.
The federal budget process is complex and none of us can forecast what the final package will contain. Your Senators and Representatives are your first line of defense in Washington. We encourage you to contact your representative or their staff and let them know how the proposal presented by the President will impact your business and your community. NGCOA will continue to monitor Washington’s activities along with the We Are Golf Coalition, ensuring the impact on the “business of golf” is heard.