SBE Council Chief Economist on Obama Budget Plan

Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council (SBE Council), issued the following statement on President Barack Obama’s proposed budget:

“If you’re seeking good news that might help boost the economy from President Obama’s proposed budget, you will not find any. To the contrary, this budget plan is jammed with anti-growth and anti-small business measures.

“For example, under the President’s plan, taxes on the earnings of successful entrepreneurs and investors would jump dramatically. The top income tax rate would increase from 37.9 percent (personal income and Medicare taxes) to 43.4 percent in 2013. The capital gains tax would jump from 15 percent to 23.8 percent (actually 30 percent, with Mr. Obama’s proposed ‘Buffett’ tax), and the dividends tax would climb from 15 percent to 43.4 percent. For good measure, the death tax would increase, pushing the rate up from 35 percent to 45 percent. Raising taxes on risk taking is a surefire way to get less risk taking.

“Meanwhile, on the spending side, nothing is done to actually reduce total federal outlays. After massive increases in federal spending in recent years, the Obama budget does not seriously try to pull spending back to historical norms. Instead, federal outlays would persist at unprecedented levels.

“This combination of higher taxes on entrepreneurship and investment, and persistently high levels of government spending is a recipe for putting the U.S. on a long-term track of slow growth and poor job creation. If the idea is to transform the U.S. into an economy whereby the private sector is constrained by high taxes and big government, then the President has the right plan.”