File This Under: How to Really Sink the Economy, Kill Jobs, Make the U.S. Less Competitive and Capital More Scarce
It seems as though bad ideas never die when politicians can't bring themselves to reduce or cut spending. And when the economy stands on the brink of losing even more steam, Washington continues to propose things that would disincentivize entrepreneurs from investing, building businesses and business value. Over the past decade or more, SBE Council has pointed out the madness in raising taxes on carried interest and enterprise value. Do we want the U.S. economy to grow, or to shrink? If we want it to expand, elected officials cannot make growth investment less attractive. Such activity needs to be incentivized and rewarded, not punished.
Why is raising taxes on carried interest and enterprise value a bad idea?
• The carried interest tax hike would more than double taxes on growth investment in the United States. Adding it to the debt limit legislation, which is intended to restore confidence in the economy, is especially reckless as it would have the opposite impact.
• The proposal is more than "just a tax on hedge fund managers." The tax increase is aimed at real estate, private equity, venture capital, and other businesses that make long-term investments that stimulate job creation and innovation.
• By dramatically boosting the cost of capital, the carried interest proposal will discourage the risk taking required to start, grow, and save American companies.
• Our major global competitors tax carried interest as a capital gain and at rates ranging from 0% in India to 10% in China. The carried interest proposal will draw capital from our shores to more friendly foreign markets. Our global competitors are more than happy to welcome such capital.
• The proposal contains an enterprise value tax, which would deny those who build their businesses over many years long-term capital gains rates if the business is eventually sold in whole or in part. Investment partnerships would be the only form of business in America subject to this discriminatory treatment.
• The current tax treatment of carried interest and enterprise value is neither a "loophole" nor a temporary tax expenditure. The carried interest proposal would upend more than 50 years of partnership tax law characterizing carried interest and enterprise value as capital gains.
• If the carried interest proposal is enacted, then capital gains treatment for similar kinds of long-term investment may also be eliminated, ending decades of America's commitment to fostering entrepreneurial risk taking.
SBE Council finds it maddening that these economy-sapping measures are being tied to budget and debt reduction initiatives, and being urgently pushed to "save the economy" and "create greater certainty" for businesses. Meanwhile, they will do just the opposite and SBE Council will continue to advocate against these misguided proposals that hurt investment and our entrepreneurial sector.
Karen Kerrigan, President & CEO
Showing posts with label Obama tax increases. Show all posts
Showing posts with label Obama tax increases. Show all posts
Sunday, July 17, 2011
Friday, September 24, 2010
The True Impact of the Looming Year-End Tax Increases
Why exactly do the White House and Democratic leaders in Congress want to increase taxes at the end of this year?
In addition to the enormous tax increases that are being phased in under ObamaCare - including higher taxes on upper incomes, including capital gains, and penalty taxes on businesses and individuals who do not offer or have government approved health insurance, along with higher levies on pharmaceutical firms, medical device manufacturers and health insurance companies - the 2001 and 2003 tax relief measures expire at the end of this year.
If Congress does nothing, huge tax increases will hit all aspects of the economy directly.
If President Obama gets his way, large tax hikes would still be imposed, and the negative effects of those tax increases would be felt throughout the economy.
The Obama tax agenda features raising the two top personal income tax rates from 33 percent and 35 percent to 36 percent and 39.6 percent, respectively; increasing the top individual capital gains and dividends tax rate of 15 percent to 20 percent; and after it has been eliminated for 2010, re-imposing the death tax at its 2009 levels, with a top rate of 45 percent and $3.5 million exemption.
Let's consider a few key points as to why these tax increases would be bad ideas...
In addition to the enormous tax increases that are being phased in under ObamaCare - including higher taxes on upper incomes, including capital gains, and penalty taxes on businesses and individuals who do not offer or have government approved health insurance, along with higher levies on pharmaceutical firms, medical device manufacturers and health insurance companies - the 2001 and 2003 tax relief measures expire at the end of this year.
If Congress does nothing, huge tax increases will hit all aspects of the economy directly.
If President Obama gets his way, large tax hikes would still be imposed, and the negative effects of those tax increases would be felt throughout the economy.
The Obama tax agenda features raising the two top personal income tax rates from 33 percent and 35 percent to 36 percent and 39.6 percent, respectively; increasing the top individual capital gains and dividends tax rate of 15 percent to 20 percent; and after it has been eliminated for 2010, re-imposing the death tax at its 2009 levels, with a top rate of 45 percent and $3.5 million exemption.
Let's consider a few key points as to why these tax increases would be bad ideas...
Monday, September 20, 2010
The Tax Hike Prevention Act
The White House and Democratic leaders in Congress are intent on imposing a major tax increase at the end of this year. The only debate among this elite group is not if a tax hike is coming, just how big will it be.
If nothing is done, all of the 2001 and 2003 tax cuts will be wiped out. Or, if the President and congressional leaders have their way, taxes will rise on upper income earners. And make no mistake, that's largely about increased taxes on entrepreneurs, investors and small business income.
It seems that the President and Democratic leaders are counting on increased government spending, debt, regulation and taxes to somehow benefit small businesses and the overall economy.
U.S. Senator Mitch McConnell (R-KY) has a different take on matters....
Read the rest of this SBE Council Cybercolumn by chief economist Ray Keating here.
If nothing is done, all of the 2001 and 2003 tax cuts will be wiped out. Or, if the President and congressional leaders have their way, taxes will rise on upper income earners. And make no mistake, that's largely about increased taxes on entrepreneurs, investors and small business income.
It seems that the President and Democratic leaders are counting on increased government spending, debt, regulation and taxes to somehow benefit small businesses and the overall economy.
U.S. Senator Mitch McConnell (R-KY) has a different take on matters....
Read the rest of this SBE Council Cybercolumn by chief economist Ray Keating here.
Friday, August 13, 2010
Big Names from Past Weigh in For Tax Hikes
It looks like our elected officials in the nation's capital might finally get around in September to debating the issue of the 2001 and 2003 tax cuts that are due to expire at the end of December. Nothing like waiting until the last minute.
Over several years, from a Republican White House and a Republican Congress to a Democratic White House and a Democratic Congress, nothing was done to make these tax measures permanent. That restrained the benefits of tax relief, and as the end of 2010 crept ever closer, helped weigh down the economy.
Unfortunately, contrary to making these measures permanent parts of the tax code, the push is in the opposite direction by President Obama and Democratic leaders in Congress. They are looking to impose huge tax increases directed at upper-income earners, but which would hit many entrepreneurs, small businesses, and investors, and therefore, affect business expansion, economic growth and job creation.
Some big economic names from the past recently chimed in on the issue - supporting the current effort to jack up taxes...
Over several years, from a Republican White House and a Republican Congress to a Democratic White House and a Democratic Congress, nothing was done to make these tax measures permanent. That restrained the benefits of tax relief, and as the end of 2010 crept ever closer, helped weigh down the economy.
Unfortunately, contrary to making these measures permanent parts of the tax code, the push is in the opposite direction by President Obama and Democratic leaders in Congress. They are looking to impose huge tax increases directed at upper-income earners, but which would hit many entrepreneurs, small businesses, and investors, and therefore, affect business expansion, economic growth and job creation.
Some big economic names from the past recently chimed in on the issue - supporting the current effort to jack up taxes...
Monday, August 09, 2010
Some Democrats Talking Sense About Taxes
Is hiking taxes in a bad economy really a good idea?
Most economists – from supply-side economists to demand-side Keynesians – advise against it. Their reasoning or emphasis likely will be different. For good measure, they probably would come to different conclusions if the economy were growing and healthy. But in this case, there is considerable agreement within the community of economists that raising taxes now – even on upper incomes – is unwise.
Yet, President Barack Obama and Democratic leaders in Congress seem to be chomping at the bit to jack up personal income, capital gains and dividends taxes on incomes above $200,000, as well as re-imposing the death tax.
The negatives of higher taxes in a down economy, one might think, would be obvious to everyone. For example, less money for spending, reduced resources and incentives for investment, and so on.
So, why are the Democrats in our nation’s capital ignoring basic economic common sense?
Well, it’s important to point out that not all Democrats are doing so...
Read the rest of this SBE Council Cybercolumn here.
Most economists – from supply-side economists to demand-side Keynesians – advise against it. Their reasoning or emphasis likely will be different. For good measure, they probably would come to different conclusions if the economy were growing and healthy. But in this case, there is considerable agreement within the community of economists that raising taxes now – even on upper incomes – is unwise.
Yet, President Barack Obama and Democratic leaders in Congress seem to be chomping at the bit to jack up personal income, capital gains and dividends taxes on incomes above $200,000, as well as re-imposing the death tax.
The negatives of higher taxes in a down economy, one might think, would be obvious to everyone. For example, less money for spending, reduced resources and incentives for investment, and so on.
So, why are the Democrats in our nation’s capital ignoring basic economic common sense?
Well, it’s important to point out that not all Democrats are doing so...
Read the rest of this SBE Council Cybercolumn here.
Thursday, June 24, 2010
More Tax Hikes and Economic Stagnation on the Way?
No one should be surprised, given the vast expansion of government we’ve witnessed recently.
On June 22, House Majority Leader Steny Hoyer (D-MD) declared that still more tax increases – beyond those already imposed, being phased in, and promised – are on their way.
The Associated Press reported:
The Wall Street Journal noted:
Hoyer can be commended for his honesty, but certainly not for his economics. Increased taxes, including the imposition of a VAT, would only feed government’s growth, while raising costs for consumers and businesses, and reducing resources and incentives for private-sector investment and entrepreneurship. If Stoyer gets his way – and recall that he is number two in House leadership right now – it sentences the U.S. economy to stagnation and relative decline.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
On June 22, House Majority Leader Steny Hoyer (D-MD) declared that still more tax increases – beyond those already imposed, being phased in, and promised – are on their way.
The Associated Press reported:
"As the House and Senate debate what to do with the expiring Bush tax cuts in the coming weeks, we need to have a serious discussion about their implications for our fiscal outlook, including whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction," Hoyer, a Maryland Democrat, told a forum on deficit reduction…
"I don't think this is the time to increase taxes," Hoyer told reporters after the forum.
But in the longer term — after the economy has improved — Congress will have to rein in spending and raise taxes to tackle the debt, Hoyer added.
"Raising revenue is part of the deficit solution, too," Hoyer said.
The Wall Street Journal noted:
House Majority Leader Steny Hoyer said in a speech Tuesday that Democrats would have to consider passing only a short-term extension of the middle-class tax breaks, which expire at the end of this year. In the longer term, taxes likely will be going up, at least for some people, he suggested.
"As the House and Senate debate what to do with the expiring Bush tax cuts in the coming weeks, we need to have a serious discussion about…whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction," the Maryland Democrat said in prepared remarks to Third Way, a centrist Democratic think tank, in Washington…
On taxes, Mr. Hoyer was less specific. He talked about raising "revenue more fairly and efficiently," language used by supporters of a value-added tax.
Hoyer can be commended for his honesty, but certainly not for his economics. Increased taxes, including the imposition of a VAT, would only feed government’s growth, while raising costs for consumers and businesses, and reducing resources and incentives for private-sector investment and entrepreneurship. If Stoyer gets his way – and recall that he is number two in House leadership right now – it sentences the U.S. economy to stagnation and relative decline.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
Tuesday, March 30, 2010
New Tax Hikes Under Obama
Given the passage of ObamaCare and looming tax increases at the end of this year, let's take a look at where some key taxes are headed under President Obama...
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