The President’s corporate tax proposal is not a serious effort to create more jobs or make the tax code more fair and competitive. Small business groups are rightfully concerned about the President’s proposal, which would leave many small businesses and partnerships facing a tax rate increase upwards of 41%. The National Federation of Independent Business chief, Dan Danner, said, "Reforming the corporate tax code does not help the majority of small businesses," and the National Small Business Association echoed these comments, saying “proposed changes could have a substantial negative effect on small business.”
Raising tax rates is one of the fastest ways to slow economic growth, hinder risk taking, and prevent jobs from being created. America needs to show that it is open for business, which is why Republicans want to lower tax rates and root out special interest loopholes by making the code flatter and more fair - both on the corporate and individual side. Rather than putting forward a campaign-year, political document, the President should lead on these important issues and work with Congress to help boost small business growth and job creation.
Today In History: In 1861, President-elect Abraham Lincoln arrived in Washington, D.C., amid secrecy and tight security. With seven states having already seceded from the Union since Lincoln's election and the threat of civil war hanging in the air.
Birthdays: Rep. Kenny Marchant, Dakota Fanning, Emily Blunt, W.E.B. DuBois, Aziz Ansari, Molly Hooper and Matt Zackon
Here is what’s in today’s Ledger …
State Of Play: President Obama’s Tax Proposal Costs Jobs
The Wrong Approach: The President’s Plan Increases The Cost Of Doing Business, Creates New Taxes, and Raises The Total Tax Burden. This week Mr. Obama proposes a 28% rate for corporations, but last week he endorsed a 41% tax rate on nearly 30 million businesses that are not corporations and thus pay profits taxes as personal income. … One of the biggest revenue raisers in the plan is a new "global minimum tax" applied to corporations, which means Ford and Apple would get to fill out another set of tax forms. Such a tax is likely to lead to the same complexities, extra compliance costs and headaches as the hated Alternative Minimum Tax has for individuals. … What the White House reformers don't like to admit is that corporate profits are taxed twice—first, via the corporate tax, then again at the shareholder level through the dividend or capital gains levies. Mr. Obama wants to cut the top corporate tax rate by 20% but raise the capital gains tax by almost 60% and nearly triple the dividend rate. … This means overall taxes on most owners of the company (except tax-exempt entities and foreign owners) would be higher. When including the corporate tax, the total tax burden on dividend income today can reach as high as about 45%. Under Mr. Obama's various tax proposals, the burden would be closer to 58%. Such a deal. The Wall Street Journal
• President Obama’s Plan Will “Shrink The U.S. Footprint” In The World Market and Cost Jobs. "No other developed country imposes such a 'minimum tax' on the foreign earnings of their corporations," said the Business Roundtable, a trade group of chief executives of large U.S. companies. Some economists agree. The minimum tax proposal for international earnings "is totally misguided both from a competitive standpoint and a jobs standpoint," said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. "Obama's plan, if enacted, will shrink the U.S. footprint in world markets and lose jobs." The Associated Press
President Obama’s Proposal Creates New Loopholes. Economists note that Obama's plan would upturn the very playing field the administration says it wants to level. It would give manufacturers preferential treatment: Tax breaks would effectively cap their rate at 25 percent. Other companies would pay up to 28 percent. … Some say such varying rates can distort the economy by diverting investment into some industries and away from others that might pack a bigger economic punch. "The administration is not making sense," says Martin Sullivan, contributing editor at publisher Tax Analysts. "The whole idea of corporate tax reform is to get rid of loopholes, and this plan is adding loopholes back in." The Associated Press
• President Obama Continues To Pick Winners and Losers In His Latest Tax Proposal. One principle of tax reform is to create neutrality within and across industries—a level playing field. As the White House proposal puts it, the current code "distorts choices such as where to produce, what to invest in, how to finance a business, and what business form to use." But then the plan ignores that advice and picks winners and losers. It offers a sweetheart 25% rate for certain manufacturers and even lower for "advanced manufacturing," which would invite a lobbying free-for-all in Congress. Meanwhile, the plan punishes those the White House doesn't like, such as companies in oil and gas or with operations abroad. … The oil and gas industry has led manufacturers in job creation for four years and already pays at or near the highest effective federal tax rate of any industry. Yet the President's tax plan raises its taxes but retains (as best we can tell) the credits and other giveaways to his supporters in green energy. The Wall Street Journal
President Obama’s Tax Proposal Will Cause U.S. Multinationals To Relocate Overseas. Mr. Obama's goal is to stop outsourcing and return operations to the U.S. But the main effect would be for U.S. multinational firms to become German, Chinese or Swiss, and thus exempt from the uncompetitive U.S. taxing regime. The best way to prevent outsourcing is to get U.S. tax rates on capital and corporate profits as low as possible. The Wall Street Journal
State Of Play (2): The President’s Plan Doesn’t Help Small Business, In Fact It May Actually Hurt It
NSBA: The President’s Proposal Could Have A Substantial Negative Effect On Small Business. In addition to punting on the tax rates paid by the 83 percent of small businesses that pay taxes on the owner(s) personal income tax level, this proposal would make two other potentially harmful changes: eliminating “last in first out” accounting and changing depreciation schedules which would scale back capital cost recovery. Other proposed changes could have a substantial negative effect on small business, however the proposal is unclear. Press Release
• Video – Small Business Association President: The President proposal isn’t sufficient, doesn’t do enough for small business. Fox News
NFIB: The President’s Plan Does Not Help The Majority Of Small Business. Reforming the corporate tax code does not help the majority of small businesses; in fact, it creates even more uncertainty by taking away the deductions that many small-business owners count on each year. Furthermore, as complicated as the tax code is, this plan from the administration will make it even more complicated for a small-business owner. … The focus should be on individual rate reform, keeping the tax rates for small business low, and allowing small businesses to actually grow and create jobs, as opposed to being a piggy bank for the IRS.” Press Release
Small Business and Entrepreneurship Council: “The Last Thing This Economy Needs Is Higher Taxes On Business, Investment and The Energy Sector.” "The idea of reducing tax breaks and credits in order to broaden the base and lower corporate income tax rates is sound. Unfortunately, President Obama's plan also proposes to increase overall taxes on corporations and investors, while still favoring certain industries over others. The last thing this economy needs is higher taxes on business, investment and the energy sector," said SBE Council chief economist Raymond J. Keating. … “Ideally, we need substantially lower tax rates and overall tax relief to help get this economy back on a path of robust economic growth. And both corporate income and personal income tax rates must be reduced, so that all businesses, including small firms, can benefit and drive innovation, economic growth and job creation forward," concluded Keating. Press Release
State Of Play (3): House Republicans Are Focused On Growing The Economy, Boosting Small Businesses
Cantor, House GOP Are Focused On Getting America’s Job Growth Engine Running Again. Among the other big ticket items coming up for consideration, Majority Leader Eric Cantor says Republicans will pass a bill in early March that aims at helping entrepreneurs launch businesses, known as the Jumpstart Our Business Startups (JOBS) Act. He also says the House will enact a 20 percent small business tax cut this spring before Tax Day. “We have to afford access to more financing for small businesses and address the regulatory burden that small businesses are facing so we can see them start up again,” Cantor, R-Va., said on Fox News Sunday last weekend. “Small business is the job growth engine in this country. This package represents the first opportunity for us post the payroll tax holiday extension to work together in a bipartisan manner and get something done.” ABC News
• Senate Democrat Obstruction On 50 Jobs Bills? It’s Possible! Senator Reid Has Already Refused To Act On Nearly 30 Bipartisan House-Passed Jobs Bills. But these efforts are likely to face resistance, or could be completely ignored, by the Democratic-controlled Senate, adding more legislation to the slate of House-passed jobs bills that have yet to be considered in the upper chamber. That number now stands around 30, but an aide close to Cantor said it is “possible” it could grow as high as 50 bills by the time they’re through. ABC News
Keeping Tabs: Rising Gas Prices Are The Latest Costly Example Of President Obama’s Failed Energy Strategy
Gas Prices Are 52 Cents Higher In Florida Than They Were A Year Ago. The average price of a gallon of gasoline hit $3.59 on Tuesday, according to the Energy Information Administration. Floridians pay an average of $3.68 per gallon, 52 cents higher than a year ago, AAA reports. Politico
Gas Prices Surge – Already Up 10% This Year. The national average price for a gallon of gasoline jumped 3.3 cents overnight, to $3.612, according to the motorist group AAA. That's the 16th consecutive increase. In many locations across the nation, prices are already considerably higher, with many gas stations in New York and California already selling gas for $4 a gallon or more. Hawaii leads the way, with gas prices topping an average $4.247. Overall, prices are up 10% from the start of the year. CNN
Gas Prices On The Rise In Richmond, Analysts Say “We Have Not Seen The Worst.” The average price for self-serve regular gas has reached $3.50 in Richmond, with no immediate end of the price climb in sight. "We have not seen the worst," AAA Mid-Atlantic's Martha M. Meade said in a statement Wednesday. "Pump prices tend to go up around Memorial Day as the summer demand driving season kicks off." Richmond Times-Dispatch
• Click here to view the multiple bipartisan bills the Republican-led House has passed to boost domestic energy production and provide relief at the pump – When will Senator Reid Act?