SBE Council expressed little surprise regarding the results of second quarter GDP data released today by the U.S. Bureau of Economic Analysis (BEA). The dismal performance of the economy is a reflection of the low confidence and ballooning uncertainty among small business owners. SBE Council's recent "Entrepreneurs and the Economy" survey reflected the dour mood among small business owners -- they remained stressed about their firms' financial condition, and expressed widespread dissatisfaction with the direction of federal economic policies. Higher business costs - including gas prices - have been eating into their bottom lines and stunting growth.
The BEA reported a real GDP growth rate of 1.3 percent in the second quarter, and announced a downward revision in growth during the first quarter of 2011 and the fourth quarter of 2010.
"Despite all the great speeches about making the U.S. the best country in the world to do business and helping entrepreneur's access capital and create jobs, there have been no substantive policy initiatives from the White House to back up the rhetoric. The trend continues in the direction of more regulation and the threat of higher taxes. Instead of boosting business confidence, Washington continues to instill worry. This is what you get when you heap regulatory costs on business and threaten the economy with tax increases. Unless pro-growth policies are pursued, the grim numbers will continue," said SBE Council President & CEO Karen Kerrigan.
Raymond J. Keating, chief economist for SBE Council added: "Why is anyone surprised by the pathetic real GDP growth rate? This so-called economic recovery continues to grossly under-perform. Since the recovery began, we have not had one quarter that has even come close to matching where real GDP growth should be, and has averaged since 1950, during recovery/growth periods"
Keating said that none of the data is surprising given the direction of government policymaking for over three-and-a-half years now. What the U.S. needs, according to Keating, is tax reform and regulatory relief, more global trade opportunities, and sound money. He said we are getting the opposite.
"As for how federal debt and the debt ceiling debate fit in, that's more a signal or a symptom. The underlying trouble lies with out-of-control federal spending, and poor economic growth translating into lower government revenues. Given that the debt ceiling debate has moved beyond tax increases, and focused on some degree of spending restraint is a tiny positive. But policymaking in the U.S. will have to move in a dramatically different direction if we are to see a solid return to robust economic and employment growth."
Showing posts with label debt ceiling negotiations. Show all posts
Showing posts with label debt ceiling negotiations. Show all posts
Friday, July 29, 2011
Sunday, July 17, 2011
Raising Taxes on "Carried Interest" -- Another Bad Idea that Will Make Capital More Scarce
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
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
Tuesday, July 12, 2011
The Truth About General Aviation
As a board member of the Alliance for Aviation Across America, I understand the importance that general aviation plays in ensuring the vitality of so many communities, businesses and organizations that depend on this form of transportation for their livelihood -- indeed their very existence. So, when the President talked about taxing "corporate jets" to generate more revenue I took notice. Similar to how we at the SBE Council take notice when elected officials talk about making "high-income" people pay their "fair share" of taxes. Many of these taxpayers are small business owners and the self-employed who file taxes as individuals. Therefore, these entrepreneurs would get hit with higher taxes at a time when they need such resources to survive, grow their businesses, and hire more employees.
Another important group took notice of President Obama's singling out of general aviation as well.
Mayors from seven different states across the country sent a letter to President Obama on July 11, voicing their disappointment with his comments regarding general aviation and potential, additional tax burdens on businesses, individuals and groups that rely on this crucial form of transportation. The local officials joined a growing group of businesses and organizations that have highlighted the negative repercussions of the President's comments on an industry which represents an important part of the economy.
The text of the letter is below:
July 11, 2011
The Honorable President Barack Obama
The White House
Washington, DC 20500
Dear Mr. President:
We write to express our deep concern regarding your recent comments about general aviation, which not only mischaracterized these aircraft and their crucial importance for our economy, but suggested an increased tax burden for general aviation operators. General aviation is a vital part of our economy and national infrastructure, and we are extremely concerned about the repercussions of your statements on an already struggling industry.
General aviation is an economic engine for our national economy, supporting 1.2 million America jobs, over $150 billion in economic impact annually. These aircraft and the airports they utilize are a literal lifeline to thousands of communities across our nation, providing access to business growth, law enforcement, disaster relief, medical care and other services. They are utilized to train young pilots, reunite veterans back from overseas with their families, help to transport blood and organs to residents in rural communities, and help our companies to reach customers in markets that otherwise could not be reached.
As you know, the vast majority of businesses and organizations that own and utilize general aviation are not wealthy CEOs. Rather, they are small to mid-sized businesses and organizations that rely on these aircraft to reach far-off plants and customers, serve rural markets without access to commercial aviation, or deliver medical care and other services. We can tell you firsthand that these aircraft are a crucial tool and resource for businesses in our communities; businesses that keep our communities afloat and help workers to be able to continue to put food on their table for their families.
At such a vulnerable time for our economy, we need to be doing everything we can to support this vital industry. We stand ready to work with you and Members of Congress on this and all issues related to communities and local economies around the nation.
Sincerely,
Mayor Carl Brewer -- Wichita, Kansas
Mayor Mary Ann Maynard -- Stuttgart, Arkansas
Mayor Steve Van Oort -- Ankeny, Iowa
Mayor Matt Bemrich -- Fort Dodge, Iowa
Mayor Dick Kirchoff -- Le Mars, Iowa
Mayor Robert C. Willey -- Easton, Maryland
Mayor Dave McGirr -- Huron, South Dakota
Mayor Dave Hahn -- Wall, South Dakota
Mayor Margaret Larson -- Arlington, Washington
Mayor Bob Goedde -- Chelan, Washington
The White House needs to get informed on general aviation. At his press events, President Obama has been mischaracterizing the industry, and the majority of those who depend on general aviation.
A June 29 media release from the Alliance for Aviation Across America responded to the President by noting the following facts:
“Contrary to the President’s comments, the truth is that the vast majority of those who depend on general aviation are small to mid-sized businesses, charitable groups, medical providers, law enforcement, flight schools and disaster relief personnel that use general aviation to better serve customers, deliver crucially needed goods and services, and reach plants and far off places. In fact, for thousands of rural communities around the country, general aviation is a literal lifeline, allowing local officials to attract business, and retain access to medical care, resources and services. All told, these businesses and aircraft support over 1.2 million jobs and $150 billion in economic impact nationally.
“At such a vulnerable time for our economy, we need to do everything we can to support these businesses and groups, which represent a significant segment of our national economy, and serve as a lifeline to small towns and local economies around the nation. We will continue to work with the Administration and Members of Congress to counter these types of mischaracterizations about general aviation and ensure that we protect these aircraft and our network of airports.”
Indeed, it is a vulnerable time for the economy as small businesses can well attest. Now is not the time to be raising taxes on job creators, or critical industries, or those who depend on general aviation to keep their economies strong, and communities safe and healthy.
Karen Kerrigan, President & CEO
Another important group took notice of President Obama's singling out of general aviation as well.
Mayors from seven different states across the country sent a letter to President Obama on July 11, voicing their disappointment with his comments regarding general aviation and potential, additional tax burdens on businesses, individuals and groups that rely on this crucial form of transportation. The local officials joined a growing group of businesses and organizations that have highlighted the negative repercussions of the President's comments on an industry which represents an important part of the economy.
The text of the letter is below:
July 11, 2011
The Honorable President Barack Obama
The White House
Washington, DC 20500
Dear Mr. President:
We write to express our deep concern regarding your recent comments about general aviation, which not only mischaracterized these aircraft and their crucial importance for our economy, but suggested an increased tax burden for general aviation operators. General aviation is a vital part of our economy and national infrastructure, and we are extremely concerned about the repercussions of your statements on an already struggling industry.
General aviation is an economic engine for our national economy, supporting 1.2 million America jobs, over $150 billion in economic impact annually. These aircraft and the airports they utilize are a literal lifeline to thousands of communities across our nation, providing access to business growth, law enforcement, disaster relief, medical care and other services. They are utilized to train young pilots, reunite veterans back from overseas with their families, help to transport blood and organs to residents in rural communities, and help our companies to reach customers in markets that otherwise could not be reached.
As you know, the vast majority of businesses and organizations that own and utilize general aviation are not wealthy CEOs. Rather, they are small to mid-sized businesses and organizations that rely on these aircraft to reach far-off plants and customers, serve rural markets without access to commercial aviation, or deliver medical care and other services. We can tell you firsthand that these aircraft are a crucial tool and resource for businesses in our communities; businesses that keep our communities afloat and help workers to be able to continue to put food on their table for their families.
At such a vulnerable time for our economy, we need to be doing everything we can to support this vital industry. We stand ready to work with you and Members of Congress on this and all issues related to communities and local economies around the nation.
Sincerely,
Mayor Carl Brewer -- Wichita, Kansas
Mayor Mary Ann Maynard -- Stuttgart, Arkansas
Mayor Steve Van Oort -- Ankeny, Iowa
Mayor Matt Bemrich -- Fort Dodge, Iowa
Mayor Dick Kirchoff -- Le Mars, Iowa
Mayor Robert C. Willey -- Easton, Maryland
Mayor Dave McGirr -- Huron, South Dakota
Mayor Dave Hahn -- Wall, South Dakota
Mayor Margaret Larson -- Arlington, Washington
Mayor Bob Goedde -- Chelan, Washington
The White House needs to get informed on general aviation. At his press events, President Obama has been mischaracterizing the industry, and the majority of those who depend on general aviation.
A June 29 media release from the Alliance for Aviation Across America responded to the President by noting the following facts:
“Contrary to the President’s comments, the truth is that the vast majority of those who depend on general aviation are small to mid-sized businesses, charitable groups, medical providers, law enforcement, flight schools and disaster relief personnel that use general aviation to better serve customers, deliver crucially needed goods and services, and reach plants and far off places. In fact, for thousands of rural communities around the country, general aviation is a literal lifeline, allowing local officials to attract business, and retain access to medical care, resources and services. All told, these businesses and aircraft support over 1.2 million jobs and $150 billion in economic impact nationally.
“At such a vulnerable time for our economy, we need to do everything we can to support these businesses and groups, which represent a significant segment of our national economy, and serve as a lifeline to small towns and local economies around the nation. We will continue to work with the Administration and Members of Congress to counter these types of mischaracterizations about general aviation and ensure that we protect these aircraft and our network of airports.”
Indeed, it is a vulnerable time for the economy as small businesses can well attest. Now is not the time to be raising taxes on job creators, or critical industries, or those who depend on general aviation to keep their economies strong, and communities safe and healthy.
Karen Kerrigan, President & CEO
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