Business says vast tax increases ‘inevitable’ under Obama budget

Vast tax increases will be inevitable under President
Barack Obama’s budget blueprint, the nation’s largest business groups
complained on Friday.

The groups blasted tax increases on businesses and wealthy
individuals and families in the budget in a letter to members of the House and
Senate, while warning that escalating public debt threatened the underlying
economy.

{mosads}“If the President’s budget demonstrates the administration’s
long-term governing priorities, then it’s hard not to conclude that this spending
boom is deliberate,” the letter from the Tax Relief Coalition said.

“It is an effort to put in place programs and spending
commitments that will require vast new tax increases going forward, and give
the political class a claim on far more private American wealth,” it said.

The chief lobbyists for the U.S. Chamber of Commerce and
National Association of Manufacturers signed the letter, as did Business
Roundtable President John Castellani.

Dick Dongen, president of the National Association of
Wholesaler-Distributors, and Americans for Tax Reform President Grover Norquist
are also signatories.

Obama’s budget proposal would increase marginal tax rates on
individuals whose incomes are above $200,000, and families with incomes about
$250,000. It would also raise taxes on dividends and capital gains.

On business, Obama’s tax proposals include the elimination
of “deferral,” which will increase the taxes U.S. corporations pay on their
subsidiaries. The administration also wants to change the way “carried
interest” is paid, which would raise taxes on hedge fund managers. Carried
interest is now taxed at the 15 percent rate as capital gains, but the administration
would like to have it taxed as ordinary income, which would hit the
deep-pocketed fund managers.

The business groups warned that imposing those taxes on an
economy they said is still struggling “will delay our recovery and slow down
both economic and job growth well into the future.

“This budget is a prescription for slower economic growth,
prolonging high unemployment levels and making U.S. companies less competitive
on world markets,” they wrote.

The Senate Budget Committee on Thursday approved a new
spending plan that seeks to reduce the deficit from $1.3 trillion to $545
billion by 2015, but this depends on Congress offsetting the expense of
patching the Alternative Minimum Tax that would otherwise hit millions of
middle-class taxpayers this year.

The budget committee’s resolution would impose tougher
restrictions on spending than Obama’s plan.