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HomeUncle Sam Giveth and Taketh
Posted by Larry Doyle on July 11th, 2009 7:46 AM |
Give a penny, take a penny? How about give $50 billion, take $50 billion, if not a lot more . . .
Welcome to a Saturday morning chapter of “Uncle Sam Giveth and Taketh.”
While reviewing a number of news outlets, I was struck by the juxtaposition of two reports from The Washington Post:
White House Eyes Bailout Funds to Aid Small Firms and Democrats Agree on Tax Hike to Fund Health Care.
Standard fare, right?? Let’s not be quite so hasty.
From the former, we learn that:
The Obama administration is developing an initiative to take money from the $700 billion rescue program for the banking system and make it available to millions of small businesses, which officials say are essential to any economic recovery because they employ so many people, according to sources familiar with the plan.
The effort would represent a striking shift from the rescue program’s original mandate, since it would direct billions of bailout dollars toward a plan that aims more at saving jobs than at righting the financial system. Some economists estimate that small businesses, defined as firms with fewer than 500 workers, employ most of the country’s workforce.
From the latter, we learn that:
House Democrats agreed yesterday to raise taxes on the wealthy to pay for a sweeping expansion of the nation’s health-care system, proposing a surtax on the highest earners that could send the top federal tax rate toward 45 percent.
Republicans assailed the idea, saying the new tax would fall heavily on small-business owners, who tend to report business income on their personal tax returns.
Don’t think for a second that our political wizards in Washington are capable of precision execution on either of these fronts. Given the size of the respective programs, I think jobs saved (via increased SBA assistance) versus jobs lost (via higher taxes on small business) will be at best a push.
A few questions and comments:
1. How does Uncle Sam, in the name of the Small Business Administration, determine who receives assistance? Can Uncle Sam be influenced in picking winners and losers? Hmmmm . . .
2. Does it even matter anymore that the TARP legislation was not written for purposes of allocating funds to small business? Does the rule of law count for anything in our country?
3. On the tax front, to think the Obama administration is going to increase taxes on upper incomes (both individuals and small businesses) to as high as 45% and not touch tax rates below that is beyond naive. There is NO doubt in my mind the taxman cometh across the board at the federal, state, and local levels.
Thoughts and opinions, especially from those involved in small business, are deeply appreciated!!
LD
Reviewing the Current, Not the Waves
Posted by Larry Doyle on June 29th, 2009 8:33 AM |
Are we so focused on the beauty of the rolling surf that we have become blinded by the dangers of the shifting currents? No doubt!! Washington and Wall Street would have it no other way.
My wife and I attended a friend’s wedding on the outer part of Cape Cod this weekend. We had a few hours between the church service and reception. While enjoying a refreshment at a local waterside inn, we soaked in the beauty of the seaside setting. Little did I know, but along that very coastline the day before, two substantial homes had literally washed away as their foundations had been totally eroded by shifting tides.
In analogous fashion, haven’t Wall Street and Washington focused investors’ and taxpayers’ attention on short term goals and developments for their own profit while the public is stuck with an ever increasing bill? Sense on Cents strongly believes this to be true. The media is compliant in allowing the financial and political machines to define the ‘game’ and the ‘rules.’
The mission of Sense on Cents in navigating the economic landscape is to redefine the ‘game’ and the ‘rules’ so people can truly enjoy the beauty of the waves while fully appreciating the dangers of the shifting currents.
At this point, Wall Street is looking to return to ‘business as usual.’ Meanwhile, the programs and policies of the Obama administration are not only going with the ‘current’ that severely damaged our economic foundation, but are also strengthening that current. What do I mean?
Recall that after the market crash of 1929, the two driving forces that pushed our economy and country into The Great Depression were higher taxes and increased protectionism.
While Obama campaigned on targeted tax increases for the highest income earners, there is no doubt in my mind that our entire economy will be hit with higher taxes. These tax increases will come via formal tax legislation and also via increased costs passed along by industries impacted by new legislation.
The formal tax increases for every wage earner in our country paying taxes will result from anemic economic growth. Obama as much admitted last week in a Bloomberg interview that higher taxes across the board may be a necessity. I highlighted this prospect in writing, “The Taxman Cometh”.
Jack Welch stated the other day, “we’re going to have huge tax increases” given the enormous spending programs being launched by the Obama administration, in conjunction with little to no economic growth.
Over the weekend, I read 15 state insurance funds which pay unemployment benefits are now empty. How will these states address this issue? First stop, Washington. Second stop, higher taxes. (more…)
