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Leading US Businessmen Want Higher Taxes to Save America- Ads to Air After Election
Posted by:
No Taxes Cuts!
()
Date: October 22, 2012 12:42PM
http://www.cnbc.com/id/49499262
Nobody likes taxes, and much of Wall Street has poured money into Mitt Romney campaign coffers to avoid paying higher ones.
Yet a surprising number of top money managers say they are willing to pay modestly higher rates. They reason that revenue-raising measures are an essential complement to the spending cuts they say are needed to curb the massive U.S. budget deficit.
"It's kind of like taking a distasteful medicine. On the way down, it may not be pleasant," said Ron Florance, who helps manage assets worth $169 billion at Wells Fargo Private Bank. "But in the end, it contributes to longer-term health, and that's what we're looking for at this point."
In recent weeks, Goldman Sachs [GS 123.75 0.13 (+0.11%) ] CEO Lloyd Blankfein and JPMorgan Chase's [JPM 41.895 -0.425 (-1%) ] Jamie Dimon became the latest Wall Street heavyweights to say they would be willing to pay more in exchange for a deal to balance the country's books.
Conventional wisdom in the world of finance and investing says higher taxes, particularly in today's fragile economic climate, would stifle wealth creation, suppress hiring, and condemn the economy to an extended stretch of slow growth.
Simple Math
The U.S. deficit in 2012 will top $1 trillion for a fourth straight year, pushing the national debt past $16 trillion. While the U.S. currently borrows at record low interest rates, investors worry this will change.
"We must stabilize, then reduce the national debt, or we could spend $1 trillion a year in interest alone by 2020," warned the authors of a 2010 Congressional committee's deficit-reduction plan known as Simpson-Bowles. Neither Obama nor Romney has embraced the plan in its entirety.
The issue will come to a head even before the winner of the Nov. 6 election is sworn in. In January, $500 billion of Bush-era tax cuts for all earners will expire and about $100 billion of automatic spending cuts will kick in.
Markets expect Congress will avoid letting all of this happen at once for fear it would plunge a fragile economy back into recession. But many say they want lawmakers to draft a long-term plan to reduce the deficit gradually over time.
"It has to be a balancing act," Balestrino said. "You're not going to just cut taxes like Romney wants to do or just increase spending like Obama seems to want to do."
Most investors agree long-term deficit reduction would require painful spending cuts, including for programs such as Social Security and Medicare struggling to keep up with an aging population.
But many also say taxes should be on the table too, especially for top earners whose effective tax rates are at the lowest level in decades.
According to the nonpartisan Tax Policy Center, federal tax revenue in 2010 fell to levels not seen since shortly after World War II, the result of slow growth and the sweeping but temporary tax cuts passed when George W. Bush was president.
"Simple math says the U.S. government will have to increase revenues to make a dent in the deficit," strategists at BlackRock [BLK 188.11 -0.83 (-0.44%) ], a giant in the U.S. investment world with $3.68 trillion in assets, said in a recent note to clients.
Nobody likes taxes, and much of Wall Street has poured money into Mitt Romney campaign coffers to avoid paying higher ones.
Yet a surprising number of top money managers say they are willing to pay modestly higher rates. They reason that revenue-raising measures are an essential complement to the spending cuts they say are needed to curb the massive U.S. budget deficit.
"It's kind of like taking a distasteful medicine. On the way down, it may not be pleasant," said Ron Florance, who helps manage assets worth $169 billion at Wells Fargo Private Bank. "But in the end, it contributes to longer-term health, and that's what we're looking for at this point."
In recent weeks, Goldman Sachs [GS 123.75 0.13 (+0.11%) ] CEO Lloyd Blankfein and JPMorgan Chase's [JPM 41.895 -0.425 (-1%) ] Jamie Dimon became the latest Wall Street heavyweights to say they would be willing to pay more in exchange for a deal to balance the country's books.
Conventional wisdom in the world of finance and investing says higher taxes, particularly in today's fragile economic climate, would stifle wealth creation, suppress hiring, and condemn the economy to an extended stretch of slow growth.
Simple Math
The U.S. deficit in 2012 will top $1 trillion for a fourth straight year, pushing the national debt past $16 trillion. While the U.S. currently borrows at record low interest rates, investors worry this will change.
"We must stabilize, then reduce the national debt, or we could spend $1 trillion a year in interest alone by 2020," warned the authors of a 2010 Congressional committee's deficit-reduction plan known as Simpson-Bowles. Neither Obama nor Romney has embraced the plan in its entirety.
The issue will come to a head even before the winner of the Nov. 6 election is sworn in. In January, $500 billion of Bush-era tax cuts for all earners will expire and about $100 billion of automatic spending cuts will kick in.
Markets expect Congress will avoid letting all of this happen at once for fear it would plunge a fragile economy back into recession. But many say they want lawmakers to draft a long-term plan to reduce the deficit gradually over time.
"It has to be a balancing act," Balestrino said. "You're not going to just cut taxes like Romney wants to do or just increase spending like Obama seems to want to do."
Most investors agree long-term deficit reduction would require painful spending cuts, including for programs such as Social Security and Medicare struggling to keep up with an aging population.
But many also say taxes should be on the table too, especially for top earners whose effective tax rates are at the lowest level in decades.
According to the nonpartisan Tax Policy Center, federal tax revenue in 2010 fell to levels not seen since shortly after World War II, the result of slow growth and the sweeping but temporary tax cuts passed when George W. Bush was president.
"Simple math says the U.S. government will have to increase revenues to make a dent in the deficit," strategists at BlackRock [BLK 188.11 -0.83 (-0.44%) ], a giant in the U.S. investment world with $3.68 trillion in assets, said in a recent note to clients.
Re: Leading US Businessmen Want Higher Taxes to Save America- Ads to Air After Election
Posted by:
kevster
()
Date: October 22, 2012 02:40PM
Interesting. I wonder that, if Romney wins, all the sudden big bussines and big earners will silently fall in line and go along with a tax hike for upper income earners.
The markets have been doing well this year. If a comprehensive debt reduction plan is passed to reduce spending AND increase taxes there will be a rally for sure.
If Romney wins, and this happens everyone can say "see, Romney the pro-business guy made the markets jump". Wich will be utter bs.
The markets have been doing well this year. If a comprehensive debt reduction plan is passed to reduce spending AND increase taxes there will be a rally for sure.
If Romney wins, and this happens everyone can say "see, Romney the pro-business guy made the markets jump". Wich will be utter bs.
Re: Leading US Businessmen Want Higher Taxes to Save America- Ads to Air After Election
Posted by:
Reality Check 4 U
()
Date: October 22, 2012 02:59PM
kevster Wrote:
-------------------------------------------------------
> Interesting. I wonder that, if Romney wins, all
> the sudden big bussines and big earners will
> silently fall in line and go along with a tax hike
> for upper income earners.
>
> The markets have been doing well this year. If a
> comprehensive debt reduction plan is passed to
> reduce spending AND increase taxes there will be a
> rally for sure.
>
> If Romney wins, and this happens everyone can say
> "see, Romney the pro-business guy made the markets
> jump". Wich will be utter bs.
No way in hell that Romney is going to close corporate loopholes or tax the rich. Complete republican BS to get elected.
-------------------------------------------------------
> Interesting. I wonder that, if Romney wins, all
> the sudden big bussines and big earners will
> silently fall in line and go along with a tax hike
> for upper income earners.
>
> The markets have been doing well this year. If a
> comprehensive debt reduction plan is passed to
> reduce spending AND increase taxes there will be a
> rally for sure.
>
> If Romney wins, and this happens everyone can say
> "see, Romney the pro-business guy made the markets
> jump". Wich will be utter bs.
No way in hell that Romney is going to close corporate loopholes or tax the rich. Complete republican BS to get elected.