Thursday, July 23, 2009

Tax policy set to deter economic growth:

“Read my lips, no new taxes,” “If you make less than 250,000 dollars, your taxes will not go up by one dime.” Over time we have heard these lofty pledges by candidates running for the American presidency. In the current case, while President Obama may honor that pledge for a little while on the income tax front, it is clear that taxes on the fringe are all set to rise. From new taxes proposed on investment transactions, to cap and trade (hidden tax on consumers), to sin taxes on liquor, and cigarettes, and dare I say gasoline, to new inheritance taxes, and taxes on the wealthy to pay for the health care bill, to continuing on with the highest small business taxes in the world, it is safe to say that the current administration and its Congress is hell bent on raising revenues while honoring its central campaign pledge for as long as it can. Please note in a rare and possibly unnecessary confession, I just don’t want you to think I am a hard core Republican (we are just getting to know each other after all) that I voted for these Democrats this time because I thought they were going to govern from the center and also because I was appalled by the Bush presidency. At this point, I think it highly unlikely they would earn my vote again. Anyhow, a budget crisis due to optimistic growth projections and a California-esque inability to cut spending in any meaningful way, spending that is annually above what we are technically entitled to enjoy based on what we produce, may force the President to renege on such promises, but that is a bit off in the future. In any event, trickle-down economics has been abandoned, and while I still sometimes agree with Al Sharpton’s assessment: “We didn’t get the trickle, we got the down,” it is hard to argue that creating conditions for the issuers of jobs to succeed should be something to ignore to the degree that we are leaning towards. Keep in mind, as a framework, that taxes on Britain’s highest tax bracket just jumped from 40% to 50% in response to their budget crisis. Many people I know in the industry are thinking about relocating to other more tax-favorable locations in Europe. For a financial based economy like England has, this may turn out to be more troublesome than envisioned. But time will tell if this is just noise. In any event, Republicans are currently rolling in their graves as current policy appears to be as far left as Bush was right. In a nation that describes itself as centrist, I find it incredible that we cannot seem to get a centrist in office, someone who is morally liberal, fiscally conservative, and is mindful of the underprivileged.

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