Economy & Budget

Great recession? More like ‘great heist’ of taxpayers

Great recession? More like 'great heist' of taxpayers

Just as he has “evolved” on same-sex marriage, President Barack Obama has had inconsistent policy on small business taxes while in the executive office, and it came to the fore in last week’s presidential debate against Republican candidate Mitt Romney.

The uncertainty among small business owners over just what Obama will tax has stymied the economic recovery, experts say.

William Frezza, a fellow in technology and entrepreneurship at the pro-free market Competitive Enterprise Institute said, “The current administration doesn’t have any clear policies as much as it has intentions, and it seems to drop those intentions on Congress and hope for the best–and Congress is completely dysfunctional.”

“So as a result of having an administration that only has intentions and a dysfunctional Congress, we are adrift,” he said.

Businesses are virtually on strike as entrepreneurs and other private sector job creators wait to see whether the presidential and congressional election results for will spell death for innovation and hiring, he said. He had no comment on the Obama administration politically, per CEI’s status as a nonpartisan nonprofit.

Bruce Specter, a principal consultant in the financial services industry and small business owner, said, “Fear is front and center for everybody so it’s putting a hurt on business because people are not making decisions. Customers are not spending, banks are not lending even though they have all the money.”

“If it affects our clients, it affects us. It affects consumers, it affects the businesses I work with. It’s the old trickle-down economics, and we’re feeling it,” he said.

One of Specter’s clients is a businessman in his 70s and ready to retire. He is holding off on finding new financial investors for his company because he cannot assess the risks as they exist in the current murky tax environment, let alone as it may appear after the presidential election, Specter said.

Ryan Ellis, tax policy director at the national advocacy group Americans for Tax Reform, said, “What Obama wants to do, he’s not even really saying. Nobody can really know, and that’s pretty much the key to understanding the whole thing.”

Obama said before his election in 2008 that he would not raise taxes on the middle class.

“I can make a firm pledge.  Under my plan, no family making less than $250,000 a year will see any form of tax increase,” he said at a campaign stop in Dover, New Hampshire. “Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

Ellis said, “He has already raised taxes many times. He has already raised taxes many times on sub-250k voters. So he’s already broken that promise many times.”

Obama added 62 cents in taxes on cigarette prices in 2009, a hike of 156 percent. A report on the Americans for Tax Reform website lists statistics that show the average smoker’s income just over $36,000 before the tax hike’s codification.

The Affordable Care Act alone has 20 new or higher taxes on American families and small businesses, according to the ATR website. During his push for the healthcare overhaul, Obama told ABC News anchor George Stephanopoulos that the individual mandate was not a tax increase.

But when the Supreme Court upheld the law’s individual mandate provision in its ruling this summer, it did so by seeing the provision as a constitutional tax increase.

Based on the deficits in the Obama administration’s 10-year budget plan for 2013-2022, Obama is likely to push for more tax hikes on the middle class. Nobody can know for sure, but that money has to come from somewhere, Ellis said.

Regarding President Obama’s remarks at the Oct. 11 Presidential debate, a post-debate fact check by the advocacy group Americans for Tax Reform refutes Obama’s claim to have lowered taxes in a meaningful way for small businesses. It also points out that though the president said at the debate that he was in favor of reducing the corporate tax, the budget plan his administration released in the spring actually contains tax hikes for corporations. Here’s the link to the Americans for Tax Reform fact check in question.

Frezza at CEI said, “No one knows when the next shoe is gonna drop. Everybody is sitting on their hands until at least after the next election and even then, regardless of the outcome, only the lame duck session is going to tell us what is going to happen on January 1st.”

“The economy does best and corporations and entrepreneurs do best when we live under the rule of law, not when there are exemptions, when there are executive orders, when there are capricious actions by government that no one knows what’s going to happen next,” he said.

Businesses see their future depending not just on the presidential election, but on the voting records and ambitions of who wins the Senate and House of Representatives races as well, he said.

Bruce Specter, the financial services consultant, echoed this idea. When asked about what he sees for the future, he said, “It depends on what side of the bed legislators wake up.”

“It’s that same thing where they continue to mortgage the future. Well, the future’s today and we can’t afford it anymore,” he said. “They call it the Great Recession, some of the people I work with. I call it the Great Heist,” he said.

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