“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.”
Showing posts with label federal budget. Show all posts
Showing posts with label federal budget. Show all posts
Tuesday, February 14, 2012
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:
Tuesday, November 29, 2011
Super-Committee Failure: Good or Bad?
When the congressional deficit super-committee failed in its task of coming up with a bipartisan plan to close the federal government's deficit, some of the reactions were far more interesting than the failure itself.
For example, a down stock market that day was attributed to the committee's inability to reach a deal. Really? Did most market players actually expect this group to arrive at an agreement? That's tough to accept. After all, from the start, it was hard to imagine how this group would close the huge chasm between Republicans opposed to tax increases, and Democrats opposed to any serious efforts to reduce, or at least restrain, federal spending.
Failure was almost inevitable, especially with a major election less than a year away.
But some of the negative responses to the super-committee's failure seem to rest on the idea that no deal was necessarily bad for the economy. This view, however, must assume that the act of closing a budget deficit is what matters, and how it is done does not really matter to the economy...
Read the rest of this SBE Council Cybercolumn by chief economist Ray Keating here.
For example, a down stock market that day was attributed to the committee's inability to reach a deal. Really? Did most market players actually expect this group to arrive at an agreement? That's tough to accept. After all, from the start, it was hard to imagine how this group would close the huge chasm between Republicans opposed to tax increases, and Democrats opposed to any serious efforts to reduce, or at least restrain, federal spending.
Failure was almost inevitable, especially with a major election less than a year away.
But some of the negative responses to the super-committee's failure seem to rest on the idea that no deal was necessarily bad for the economy. This view, however, must assume that the act of closing a budget deficit is what matters, and how it is done does not really matter to the economy...
Read the rest of this SBE Council Cybercolumn by chief economist Ray Keating here.
Thursday, July 21, 2011
Small Business in the Crosshairs of Budget/Debt Limit Battles
Since the late 1980s, the general direction on federal individual income taxes has been higher. That's been a negative for the economy in general, including for entrepreneurs and their businesses.
Unfortunately, since the start of his administration, including during the current debate over what to do about ever-mounting federal debt, President Barack Obama has exhibited a relentless desire to continue this counterproductive upward trend on income taxes.
Keep in mind that most businesses - about 92 percent - pay the personal income tax (for example, as sole proprietorships, partnerships, S-Corps, etc.), rather than the corporate income tax. That means higher personal income taxes hit the bottom line of entrepreneurs and their businesses. Quite simply, that results in diminished incentives and resources for risk taking and job creation, and additional resources in the hands of the political class.
Does anyone really think that's good for the economy? Well, that is, other than the President and various misguided members of Congress...
Unfortunately, since the start of his administration, including during the current debate over what to do about ever-mounting federal debt, President Barack Obama has exhibited a relentless desire to continue this counterproductive upward trend on income taxes.
Keep in mind that most businesses - about 92 percent - pay the personal income tax (for example, as sole proprietorships, partnerships, S-Corps, etc.), rather than the corporate income tax. That means higher personal income taxes hit the bottom line of entrepreneurs and their businesses. Quite simply, that results in diminished incentives and resources for risk taking and job creation, and additional resources in the hands of the political class.
Does anyone really think that's good for the economy? Well, that is, other than the President and various misguided members of Congress...
Wednesday, February 16, 2011
The President's Budget: No Spending Restraint, Higher Taxes
A dramatic shift in rhetoric emanating from the Obama White House occurred after the November elections. Before November 2010, anti-business talk and policies reigned. Since the elections, President Barack Obama has worked to shift the administration's tone towards business.
Unfortunately, as evident by the President's budget proposal, political talk turns out, once again, to be quite cheap in our nation's capital.
The 2012 budget plan does nothing substantive to reduce the size of government after unprecedented growth, and actually includes assorted tax increases that will hurt business and the economy.
On the spending side, after a historic increase in outlays of 40 percent over four years, the budget would provide a small one-year reduction (-2.4%) in spending during 2012, But then federal spending would quickly resume its growth.
As a share of the economy, spending would remain at unprecedented levels over an extended period of time - after hitting 25% of GDP in 2009 and 23.8% in 2010, federal outlays would equal 25.3% of GDP this year (the highest level since World War II), 23.6% in 2012, 22.5% in 2013, 22.4% in 2014, 22.3% in 2015, and then back up to 22.6% in 2016. This long, unprecedented period of high spending promises to loom as a big negative over the economy. By the way, during the late Clinton and early Bush years, outlays ranged between 18.2% and 19.7% of GDP.
Perhaps even more surprising than the budget's call for big spending are the tax increases. The following could be called "Obama's Dirty Dozen Tax Increases." However, keep in mind, that this is far from an exhaustive list in terms of measures that would increase tax bills and costs under the Obama budget...
Unfortunately, as evident by the President's budget proposal, political talk turns out, once again, to be quite cheap in our nation's capital.
The 2012 budget plan does nothing substantive to reduce the size of government after unprecedented growth, and actually includes assorted tax increases that will hurt business and the economy.
On the spending side, after a historic increase in outlays of 40 percent over four years, the budget would provide a small one-year reduction (-2.4%) in spending during 2012, But then federal spending would quickly resume its growth.
As a share of the economy, spending would remain at unprecedented levels over an extended period of time - after hitting 25% of GDP in 2009 and 23.8% in 2010, federal outlays would equal 25.3% of GDP this year (the highest level since World War II), 23.6% in 2012, 22.5% in 2013, 22.4% in 2014, 22.3% in 2015, and then back up to 22.6% in 2016. This long, unprecedented period of high spending promises to loom as a big negative over the economy. By the way, during the late Clinton and early Bush years, outlays ranged between 18.2% and 19.7% of GDP.
Perhaps even more surprising than the budget's call for big spending are the tax increases. The following could be called "Obama's Dirty Dozen Tax Increases." However, keep in mind, that this is far from an exhaustive list in terms of measures that would increase tax bills and costs under the Obama budget...
Tuesday, August 17, 2010
Out-of-Control Spending is Bad for the Economy
We're 10 months through the 2010 budget year, so what's the fiscal story? A grim, worrisome tale persists.
According the Congressional Budget Office's "Monthly Budget Review" that was released late last week, total federal receipts through the first 10 months in FY2010 were barely higher than the same period last year - an increase of less than one percent.
While corporate income tax receipts have risen substantially with corporate profits, individual income tax and social insurance revenues remain down from last year - by -4.0% and -3.7%, respectively.
This revenue stagnation - following two years of declines in federal receipts - reflects the economy's continuing sluggishness.
On the spending side, total expenditures actually fell by 2.7 percent. But don't get too excited. First, spending during the first 10 months of FY2010 came in at $2.93 trillion, down slightly from last year's $3 trillion. These remain unprecedented levels of government spending...
According the Congressional Budget Office's "Monthly Budget Review" that was released late last week, total federal receipts through the first 10 months in FY2010 were barely higher than the same period last year - an increase of less than one percent.
While corporate income tax receipts have risen substantially with corporate profits, individual income tax and social insurance revenues remain down from last year - by -4.0% and -3.7%, respectively.
This revenue stagnation - following two years of declines in federal receipts - reflects the economy's continuing sluggishness.
On the spending side, total expenditures actually fell by 2.7 percent. But don't get too excited. First, spending during the first 10 months of FY2010 came in at $2.93 trillion, down slightly from last year's $3 trillion. These remain unprecedented levels of government spending...
Friday, May 15, 2009
A Reminder on the Federal Budget
Just a quick reminder in case you temporarily forgot what’s actually going on in terms of the federal budget.
First, according to the Congressional Budget Office, federal receipts were down by 19.1 percent through the first seven months of FY2009. That includes a 24.3 percent decline in individual income tax receipts, a fall of 59.7 percent in corporate income tax revenues, flat social insurance receipts, and a drop pf 11.7 percent in “other” receipts.
Why? The atrocious economy. If the economy shrinks, government revenues shrink.
Second, federal spending is skyrocketing. Total outlays are up by 20.5 percent, including increases of 7.7 percent for defense, 7.7 percent for Social Security benefits, 10.2 percent for Medicare, 20.9 percent for Medicaid, and 22.3 percent of “other” programs and activities, plus TARP and GSE bailout spending.
That tallies up to a seven-month deficit of $799 billion.
Meanwhile, plans are pushed to expand government still more in the future, and to start imposing anti-growth tax and regulatory burdens on the private sector.
A grim reminder, indeed.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
First, according to the Congressional Budget Office, federal receipts were down by 19.1 percent through the first seven months of FY2009. That includes a 24.3 percent decline in individual income tax receipts, a fall of 59.7 percent in corporate income tax revenues, flat social insurance receipts, and a drop pf 11.7 percent in “other” receipts.
Why? The atrocious economy. If the economy shrinks, government revenues shrink.
Second, federal spending is skyrocketing. Total outlays are up by 20.5 percent, including increases of 7.7 percent for defense, 7.7 percent for Social Security benefits, 10.2 percent for Medicare, 20.9 percent for Medicaid, and 22.3 percent of “other” programs and activities, plus TARP and GSE bailout spending.
That tallies up to a seven-month deficit of $799 billion.
Meanwhile, plans are pushed to expand government still more in the future, and to start imposing anti-growth tax and regulatory burdens on the private sector.
A grim reminder, indeed.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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