CompTIA: Fiscal Cliff Will Cripple IT Sector
CompTIA says the fiscal cliff will cause major trauma to the IT sector by reducing the small business expense threshold, the R&D tax credit and access to education and government contracts.

Article


November 14, 2012 By Jason Knott

Small- and medium-sized information technology (IT) businesses will experience major trauma if Congress fails to address the fiscal cliff, according to a new CompTIA white paper.

The “Impact of the Fiscal Cliff on SMB IT Companies,” which focuses on the $955 billion domestic IT sector, warns that mandatory spending cuts will harm small and medium IT businesses, as well as the economy as a whole. The paper also points out specific business expensing and tax credit provisions that will harm small IT firms, as well how cuts in government programs will impact the sector.

“As Congress returns to wrap up unfinished business, I urge them to consider the impact of tax and federal policies on the domestic IT sector, which employs more than two million workers and contributes $110 billion to workers’ payrolls,” says Todd Thibodeaux, president and CEO, CompTIA. “An approach that balances revenue increases with spending cuts while prioritizing policies and programs that spur innovation and entrepreneurship can right the ship and sets us on a steady economic course.”

A recent CompTIA survey of IT and business executives found that approximately two-thirds (65 percent) support a degree of balance in addressing the fiscal cliff. Twenty-six percent feel Congress should implement spending cuts and revenue increases equally, while 23 percent favor slightly greater spending cuts and 16 percent support slightly greater revenue increases.

Click image to view CompTIA white paper “Impact of the Fiscal Cliff on SMB IT Companies.”

The white paper highlights a number of tax policies that have lapsed or are set to expire at the end of the year and threaten to hit technology businesses. Those provisions include:

Section 179 Expensing: Small business expensing will be reduced from $139,000 in 2012 to $25,000 in 2013. This provision will affect IT businesses disproportionately, as upgrading to new technology equipment is a major business expenditure that would be impacted.

R&D: The research and experimentation tax credit, which incentivizes developing or improving new products and technologies, must be renewed.

Moreover, sequestration, or across-the-board spending cuts set to go into effect in 2013, will impact small IT businesses significantly, including:

Government Purchasing: The U.S. government is a major purchaser of IT services, through the Department of Defense and other agencies. Government spending also drives adoption of IT services and innovation in this area by leading the private sector on cybersecurity, cloud and other emerging technologies. Sharp decreases in government investment in basic and applied research threaten to have a trickle-down effect on the technology sector as a whole.

Access to Capital: Cuts to programs that increase small business lending and access to capital are another area of concern to the IT sector. Cutting these programs will limit financing options for small entrepreneurs and startups that may otherwise face challenges in securing funding.

Access to Education: Programs that expand life-long learning in computer sciences and basic IT skills will be jeopardized by sequestration. The Department of Education, the Trade Adjustment Assistance Community College and Career Training Grant and Department of Labor’s Veterans Employment and Training are among the agencies and programs that would be impacted. These programs are particularly important to the IT sector as companies of all sizes report a skills gap in the workforce. Moreover, there are currently 280,000 open IT-related jobs, which could be filled through training and certification programs.

“As President Obama works to strengthen the economy, it is critical that he supports the efforts of small businesses to grow and innovate,” adds Thibodeaux. “It is equally important that his administration act to help displaced and unemployed workers who, with training and assistance, can find meaningful careers in IT, and contribute to U.S. innovation and global leadership.”

Work Smarter: Keep Ahead of the Competition

Keep up with the changing A/V world with Commercial Integrator. Each issue makes it easy to understand and apply the latest A/V trends and techniques — whether you deal with UHDTV, wireless AV, Digital Video/IPTV, networking, HDBaseT or HDMI.
It's not enough to keep up with the competition. You need to stay ahead of them. Subscribe to Commercial Integrator today for the latest techniques and insights you need to drive your business.

Social Bookmark or Share This
  • Facebook
  • Twitter
  • Digg
  • Del.icio.us
  • Yahoo! Bookmarks
  • Google Bookmarks
  • StumbleUpon
  • Technorati
  • Reddit
  • Windows Live
  • LinkedIn
  • Evernote
  • E-mail


  • Latest
  • Blogs
  • Photos
  • Resources
3 Tips for Delivering the Integrated Systems Your Customers Want

K.C. Schwarz, CEO of USAV Group, offers some valuable advice as to how system integrators can make the transition from offering traditional integration services to delivering fully functional electronic systems that solve customer problems across traditional system boundaries.

Why Selling Products Will Lead to Certain Failure for the AV Integrator
Why You Don’t Have to Start from Scratch When Designing Higher Ed Huddle Rooms
Diversification: The Key to Commercial Integration Survival in 2021
Solutions Providers of the Future: Keep Your Eyes Focused on User Experience
View more blog posts
White Paper:
Ignorance, Defiance on ADA Compliance Among Regulatory Nightmares

Many integrators still don’t know everything they’re supposed to be doing — from ADA to new overtime rules to EPA compliance and more — possibly bogged down by laws they are unable to keep up with.

White Paper: Secrets to Installing Outdoor Audio-Video Safely
White Paper: New Standard Revs Up Networking Game
White Paper: 7 Tips for Rolling Out University Digital Signage
White Paper: From Chaos to Control - Your Guide to Business Efficiency
White Paper: The Ultimate Guide to As-a-Service
White Paper: IP Meets IoT: Choosing the Right Technology for the Future of Building Automation
Webcast: How Selling Broadband Services Can Boost Monthly Revenue
View more papers or webcasts


Recent comments

You may want to check out the Case Study from one of our partners, Arrive Systems, on mobile collaboration…

Posted by rhods on 2016 07 28 · commented on
'Why You Don't Have to Start from Scratch When Designing Higher Ed Huddle Rooms'.

D-A-T-A

Posted by Tom LeBlanc on 2016 07 25 · commented on
'The Little 4-Letter Word Your Customers Want Most'.

Maybe I missed something, what is the little 4-letter word?

Posted by eolsen@unifiedav.com on 2016 07 25 · commented on
'The Little 4-Letter Word Your Customers Want Most'.

Mike;

Great to hear. Nice selection and focus on the AV Integrator.

What section of InfoComm…

Posted by Tucker on 2016 06 22 · commented on
'Lights Out: How Integrators are Missing Opportunities in the Lighting Sector'.