Politicians Write Their Own Death Warrants
It’s been called “taxmaggedon,” the nuclear tax bomb, and other unflattering things. “It” refers to the various tax breaks for businesses and wage earners that will expire in December unless Congress and the president act to extend them. According to an estimate by the Heritage Foundation, collectively they amount to a $494 billion economic hit, and they don’t include the new taxes, which go into effect Jan. 1, 2013, associated with the Affordable Care Act.
Not to worry, you say? Congress understands the potential impacts of these tax bombs and they will, as usual, wait until the last minute to extend them. Better late than never.
Here’s the problem with that: Since employers have no idea exactly what’s going to happen with these taxes, the situation is a cause of the uncertainty that is putting job growth in freeze frame. While the national employment data from April showed that 115,000 new jobs were created, a robust economy would be creating twice that many (not the 500,000 that the sometimes ditzy Mr. Foot-In-Mouth, Mitt Romney, asserts).
Accountants interviewed for our Industry Report on business finance were at a loss to explain how companies could adequately plan for the range of scenarios that could unfold, but they did suggest ways to take advantage of the tax breaks while they last.
The uncertainty elected officials have created will come back to bite anyone on the ballot this fall. Some of them have no idea what they are doing to contribute to this economic malaise, and I’m sure they will be in denial long after voters ship them back home.
If taxes were the only uncertainty, perhaps this would be a manageable situation, but there are also the yet-to-be finalized regulations associated with the ACA, the Dodd-Frank law, and other legislation signed into law in recent years, purportedly to address the problems that led to our near financial collapse.
U.S. Sen. Ron Johnson might not be the most personable individual serving in Congress, but he nailed it with his 2010 television ad noting the lack of people with business acumen serving in the U.S. Senate. Here’s hoping more business folks from both sides of the aisle join him next year in both houses of Congress.
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