Middle-market companies have had a tough couple of years on the tax front, according to a survey by Top 5 firm McGladrey LLP.
Among other things, the firm’s recent survey of 525 executives at mid-market firms found that a whopping 79 percent of them saw their tax bills rise at least somewhat last year. The survey laid much of the blame at the feet of the “fiscal cliff” deal put in place at the beginning of 2013 by the American Taxpayer Relief Act of 2012, and subsequent tax changes, including the new $450,000 threshold for the highest tax bracket, which is much more likely to affect middle-market companies.
Of companies that had to cut workers, more than half reported that the deal contributed to the decision, and two thirds of respondents (66 percent) said that current federal tax policy is limiting their growth.
"The middle market weathered the storm of the recession by creating millions of jobs when their larger counterparts were cutting them," said Jeff Johannesen, national tax leader at McGladrey. "However, lack of focus on this important segment of our economy has the potential to negatively impact the entire economy moving forward. Given the middle market's proven track record as an engine of economic growth, it is time for our leaders on Capitol Hill and in the White House to recognize the importance of the middle market and bring them to the table for major policy debates."
Among the survey’s other findings:
- More than three quarters (77 percent) of middle-market companies reported that their compliance burdens increased from 2013-2014.
- Fifty-two percent of middle-market companies that reported having international operations said that U.S. tax policy has limited their business growth abroad, while only 15 percent said that domestic tax policies had helped.
- Half of all companies that reported cutting back on research and development said that ATRA had influenced their decision to do so. More than three quarters (78 percent) of middle-market manufacturers said that the R&D tax credit's expiration had led to an increase in their tax bills, and 63 percent of manufacturers that reported having cut R&D over the past year said the tax credit's expiration contributed to their decisions to do so.
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