Editorial: Tax hike-prompted sell-offs bode ill
Higher taxes are not always the answer, as we have said before, and President Obama soon may see unintended consequences as a result.
Obama argues his proposed tax increases - $1.6 trillion over the next decade - won't harm the already sluggish national economy. The reaction of business owners to looming tax increases and the "incentives" of Obamacare proves otherwise, according to The Oklahoman newspaper, The Wall Street Journal and the Associated Press.
George Lucas' decision to sell Lucas Film to Disney for $4.05 billion was likely driven in part by tax considerations, estate planners say. The capital gains tax this year is 15 percent; next year it's scheduled to jump to 20 percent and Obamacare adds another 3.8 percent surtax for those earning more than $250,000.
Should business owners continue to sell the companies they founded before the year's end, the result does not bode well for job seekers or future economic growth.
Also, the prospect of higher capital gains taxes, in addition to an increase in the dividend tax rate from 15 percent to 43.4 percent, is credited with prompting recent stock sell-offs, according to The Wall Street Journal. Experts say the potential increase in such taxes could result in investors bidding down market capitalization of U.S. companies by $1.5 trillion, or 6 percent of market value.
At the same time, Obamacare's looming taxes and fees are impacting the economy. We have all heard that businesses will be penalized $2,000 per employee if they don't provide health insurance for those working more than 30 hours a week. In response, many companies have dropped existing worker coverage deemed insufficient under the new law and rolled back worker hours to fewer than 30 per week.
For many citizens, Obamacare means the loss of healthcare coverage and reduced income opportunity. Simply put, taxes influence behavior and increased burdens can have negative consequences. That is not being lost on the front lines of the economic battle.
Even Obama argues middle-class tax cuts should be extended. The problem is, when tax increases harm working families, rate hikes for those who employ middle-class families would do so as well.
Back to the drawing board, Mr. President.