By Ian Swanson - 04/23/10 05:04 PM EDT
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.
“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.