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Tuesday, December 08, 2009

SBE Council Chief Economist on President Obama’s Speech on Economy

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council (SBE Council), issued the following statement in response to President Obama’s December 8 speech on the economy:

“The President correctly emphasized the importance of small business to economic growth and job creation. Unfortunately, his policy measures either come up woefully short, or are actually pointed in the wrong direction.

“Reducing capital gains taxes and extending write-offs of capital spending are needed steps. Unfortunately, the President’s ideas here are targeted, temporary and conflicted. The economy needs substantive, permanent tax relief that boosts incentives for entrepreneurship and investment. For example, permanently reducing individual and corporate capital gains tax rates to 10% and indexing gains for inflation, and offering all businesses the write-off option would make sense. But the President not only is offering temporary measures, but also is pushing a variety of tax increases that would negatively affect entrepreneurs and investors, including higher personal income and capital gains tax rates. That’s confused economics.

“President Obama also called for creating ‘a tax incentive to encourage small businesses to add and keep employees.’ Such additional mucking with the tax code is a dubious endeavor, and would be unnecessary if broad, pro-growth tax and regulatory relief were being implemented.

“Finally, the President’s emphasis on more government spending on infrastructure and ‘clean energy’ will do nothing to boost the economy, while expanding opportunities for government to waste taxpayer money. Obviously, that’s not good for the economy.”

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