November 15, 2024

You are here: Home / Archives for income taxes

Rise Reported in Factories and Consumer Confidence

March 1, 2013 by Leave a Comment

Manufacturing grew in February at the fastest pace in 20 months, according to a report from the Institute for Supply Management. And a survey from the University of Michigan showed that consumer sentiment rose last month to its highest level since November.

Other data showed strength in job growth and the housing market. Americans spent a bit more in January compared with December, despite a sharp drop in income that partly reflected higher taxes.

“Consumers are spending, confidence is rising and manufacturing activity is accelerating,” Joel Naroff, president of Naroff Economic Advisors, said in a note to clients. “Just about all of today’s reports point to an economy on the rise.”

Businesses and consumers appear to be shrugging off changes in federal policy that will probably slow the still-weak economy.

In January, Congress and the White House struck a deal that raised income taxes on the nation’s top earners but also allowed a temporary cut in Social Security taxes to expire.

Across-the-board spending cuts were set to begin Friday. The cuts could reduce government purchases and lead to temporary layoffs of government employees and contractors. The reductions were expected to shave about a half-percentage point from economic growth this year.

The economic data Friday was mostly positive.

The Institute for Supply Management said its index of factory activity rose last month to 54.2, the highest since June 2011, from 53.1 in January. Any reading above 50 indicates growth. The report showed a jump in new orders, higher production and more hiring at factories. Manufacturing has grown for three consecutive months, indicating that factories could help the economy after slumping through most of 2012.

Separately, the Thomson Reuters/University of Michigan consumer sentiment index rose to 77.6, the second consecutive monthly increase, from 73.8 at the end of January. The rebound suggests that some people have begun to adjust to smaller paychecks stemming from the restoration of the full Social Security tax.

The Commerce Department reported that consumers increased spending 0.2 percent in January from December but cut back on big purchases like cars and appliances. Income plunged 3.6 percent, though it followed a jump in December driven by dividends and bonuses that were paid early to avoid higher income taxes.

In a separate report, the Commerce Department said that spending on construction projects fell in January by 2.1 percent, the largest amount in 18 months. But the decline followed a nearly 10 percent increase in construction spending in 2012, the first annual gain in five years.

Article source: http://www.nytimes.com/2013/03/02/business/economy/americans-spend-more-and-make-less-data-shows.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Tax Deal’s Passage Ends Latest Standoff

January 2, 2013 by Leave a Comment

The measure, brought to the House floor less than 24 hours after its passage in the Senate, was approved 257 to 167, with 85 Republicans joining 172 Democrats in voting to allow income taxes to rise for the first time in two decades, in this case for the highest-earning Americans. Voting no were 151 Republicans and 16 Democrats.

The bill was expected to be signed quickly by Mr. Obama, who won re-election on a promise to increase taxes on the wealthy.

Mr. Obama strode into the White House briefing room shortly after the vote, less to hail the end of the fiscal crisis than to lay out a marker for the next one. “The one thing that I think, hopefully, the new year will focus on,” he said, “is seeing if we can put a package like this together with a little bit less drama, a little less brinkmanship, and not scare the heck out of folks quite as much.”

In approving the measure after days of legislative intrigue, Congress concluded its final and most pitched fight over fiscal policy, the culmination of two years of battles over taxes, the federal debt, spending and what to do to slow the growth in popular social programs like Medicare.

The decision by Republican leaders to allow the vote came despite widespread scorn among House Republicans for the bill, passed overwhelmingly by the Senate in the early hours of New Year’s Day. They were unhappy that it did not include significant spending cuts in health and other social programs, which they say are essential to any long-term solution to the nation’s debt.

Democrats, while hardly placated by the compromise, celebrated Mr. Obama’s nominal victory in his final showdown with House Republicans in the 112th Congress, who began their term emboldened by scores of new, conservative members whose reach to the right ultimately tipped them over.

“The American people are the real winners tonight,” Representative Bill Pascrell Jr., Democrat of New Jersey, said on the House floor, “not anyone who navigates these halls.”

Not a single leader among House Republicans came to the floor to speak in favor of the bill, though Speaker John A. Boehner, who rarely takes part in roll calls, voted in favor. Representative Eric Cantor of Virginia, the majority leader, and Representative Kevin McCarthy of California, the No. 3 Republican, voted no. Representative Paul D. Ryan, the budget chairman who was the Republican vice-presidential candidate, supported the bill.

Despite the party divisions, many Republicans in their remarks characterized the measure, which allows taxes to go up on household income over $400,000 for individuals and $450,000 for couples but makes permanent tax cuts for income below that level, as a victory of sorts, even as so many of them declined to vote for it.

“After more than a decade of criticizing these tax cuts,” said Representative Dave Camp of Michigan, “Democrats are finally joining Republicans in making them permanent. Republicans and the American people are getting something really important, permanent tax relief.”

The dynamic with the House was a near replay of a fight at the end of 2011 over a payroll tax break extension. In that showdown, Senate Democrats and Republicans passed legislation, and while House Republicans fulminated, they were eventually forced to swallow it.

On Tuesday, as they got a detailed look at the Senate’s fiscal legislation, House Republicans ranging from Midwest pragmatists to Tea Party-blessed conservatives voiced serious reservations about the measure, emerging from a lunchtime New Year’s Day meeting with their leaders, eyes flashing and faces grim, insisting they would not accept a bill without substantial savings from cuts.

The unrest reached to the highest levels as Mr. Cantor told members in a closed-door meeting in the basement of the Capitol that he could not support the legislation in its current form.

Mr. Boehner, who faces a re-election vote on his post on Thursday when the 113th Congress convenes, had grave concerns as well, but he had pledged to allow the House to consider any legislation that cleared the Senate. And he was not eager to have such a major piece of legislation pass with mainly opposition votes, and the outcome could be seen as undermining his authority.

Robert Pear and Peter Baker contributed reporting.

Article source: http://www.nytimes.com/2013/01/02/us/politics/house-takes-on-fiscal-cliff.html?partner=rss&emc=rss

Filed Under: Your Money Tagged With: , ,

Fiscal Deal Heads for Vote in House as Pressure Rises

January 2, 2013 by Leave a Comment

The measure, brought to the House floor less than 24 hours after its passage in the Senate, was approved 257 to 167, with 85 Republicans joining 172 Democrats in voting to allow income taxes to rise for the first time in two decades, in this case for the highest-earning Americans. Voting no were 151 Republicans and 16 Democrats.

The bill was expected to be signed quickly by Mr. Obama, who won re-election on a promise to increase taxes on the wealthy.

Mr. Obama strode into the White House briefing room shortly after the vote, less to hail the end of the fiscal crisis than to lay out a marker for the next one. “The one thing that I think, hopefully, the new year will focus on,” he said, “is seeing if we can put a package like this together with a little bit less drama, a little less brinkmanship, and not scare the heck out of folks quite as much.”

In approving the measure after days of legislative intrigue, Congress concluded its final and most pitched fight over fiscal policy, the culmination of two years of battles over taxes, the federal debt, spending and what to do to slow the growth in popular social programs like Medicare.

The decision by Republican leaders to allow the vote came despite widespread scorn among House Republicans for the bill, passed overwhelmingly by the Senate in the early hours of New Year’s Day. They were unhappy that it did not include significant spending cuts in health and other social programs, which they say are essential to any long-term solution to the nation’s debt.

Democrats, while hardly placated by the compromise, celebrated Mr. Obama’s nominal victory in his final showdown with House Republicans in the 112th Congress, who began their term emboldened by scores of new, conservative members whose reach to the right ultimately tipped them over.

“The American people are the real winners tonight,” Representative Bill Pascrell Jr., Democrat of New Jersey, said on the House floor, “not anyone who navigates these halls.”

Not a single leader among House Republicans came to the floor to speak in favor of the bill, though Speaker John A. Boehner, who rarely takes part in roll calls, voted in favor. Representative Eric Cantor of Virginia, the majority leader, and Representative Kevin McCarthy of California, the No. 3 Republican, voted no. Representative Paul D. Ryan, the budget chairman who was the Republican vice-presidential candidate, supported the bill.

Despite the party divisions, many Republicans in their remarks characterized the measure, which allows taxes to go up on household income over $400,000 for individuals and $450,000 for couples but makes permanent tax cuts for income below that level, as a victory of sorts, even as so many of them declined to vote for it.

“After more than a decade of criticizing these tax cuts,” said Representative Dave Camp of Michigan, “Democrats are finally joining Republicans in making them permanent. Republicans and the American people are getting something really important, permanent tax relief.”

The dynamic with the House was a near replay of a fight at the end of 2011 over a payroll tax break extension. In that showdown, Senate Democrats and Republicans passed legislation, and while House Republicans fulminated, they were eventually forced to swallow it.

On Tuesday, as they got a detailed look at the Senate’s fiscal legislation, House Republicans ranging from Midwest pragmatists to Tea Party-blessed conservatives voiced serious reservations about the measure, emerging from a lunchtime New Year’s Day meeting with their leaders, eyes flashing and faces grim, insisting they would not accept a bill without substantial savings from cuts.

The unrest reached to the highest levels as Mr. Cantor told members in a closed-door meeting in the basement of the Capitol that he could not support the legislation in its current form.

Mr. Boehner, who faces a re-election vote on his post on Thursday when the 113th Congress convenes, had grave concerns as well, but he had pledged to allow the House to consider any legislation that cleared the Senate. And he was not eager to have such a major piece of legislation pass with mainly opposition votes, and the outcome could be seen as undermining his authority.

Robert Pear and Peter Baker contributed reporting.

Article source: http://www.nytimes.com/2013/01/02/us/politics/house-takes-on-fiscal-cliff.html?partner=rss&emc=rss

Filed Under: Your Money Tagged With: , ,

You’re the Boss Blog: What the President’s Job Plan Means to My Business

September 13, 2011 by Leave a Comment

Thinking Entrepreneur

An owner’s dispatches from the front lines.

I am trying to decide when exactly small businesses became the official poster child of the latest economic disaster. This is a relatively new phenomenon, but it’s been building for a few years. Sometimes, the attention feels good. I didn’t know everyone cared! Sometimes it feels like pandering. I have a suspicion that some of the people who are always arguing that we will destroy small businesses if we raise income taxes on the wealthy don’t really care that much about small businesses, but it sounds noble.

Over the last 33 years, my business and I have been through numerous recessions, and this is the first time I have seen so much attention given to small businesses. It feels both flattering and insulting, comforting and unsettling, honest and disingenuous. Sometimes it feels like a mother talking about her troubled teenager. “He’s a good kid, just misunderstood.” For all the attention and good intentions and well-meaning efforts to help, I do think small businesses are often misunderstood.

Running a small business can be very simple and very complicated. The simple part is how to be successful. Deliver a good product or service, price it properly and learn how to market it effectively. The hard part is avoiding all of the pitfalls along the way. Even in the best of times, we small-business owners run into and create plenty of our own pitfalls, but these last three years have been a pitfallapolooza. Many business owners, including some I’ve known very well, have taken pay cuts, lost lots of money or gone out of business. Too many have done all three.

For a long time, many people didn’t seem to care or even notice. Then somebody proclaimed that small businesses are the engine of job growth in this country. All of a sudden, the spotlight is on helping small businesses recover so they can create jobs. Why aren’t we talking more about getting big businesses to hire more people. After all, I keep reading that big businesses have generally recuperated quite nicely, and many are making record profits. Oh, but they aren’t the engine of job growth. We need small businesses to do that.

Enter President Obama, with his jobs plan. Here’s my take on what I, as a small businessman, heard in his speech: He recognizes that the politics of Washington have made the problem worse. Good. He says he’s going to try to help people who are struggling with mortgage problems. That’s good, too. He knows that the solutions to these problems can’t wait until the 2012 election. That’s certainly true. He wants to close a few tax loopholes for big corporations. I think I could live with that. He wants to rebuild schools and roads and bridges. That’s probably a good idea. And he says he wants to cut more unnecessary spending. Hallelujah.

You hear a lot of people talking about how taxes and regulation are choking small businesses, but many of these people are always talking about taxes and regulation, regardless of whether the economy is good or bad. Right now, my picture-frame and home-furnishing businesses employ 110 people, and they have certainly felt the effects of the recession and the housing meltdown, but if I have a problem it’s not with taxes and regulation. It is that I don’t have enough customers with money to spend. That’s why the most important aspect of the president’s plan is that it would inject $450 billion into the economy.

At a time like this, it’s hard not to be a little nervous about the government spending that kind of money. I am not an economist, but it does appear that many economists think this kind of stimulus makes sense. I noticed that Paul Krugman, a liberal, and Mark Zandi, who was John McCain’s economic adviser, seem to like the plan. I know a lot of people think the last round of stimulus didn’t work, but I’m not so sure. Has everyone forgotten how bad things were? Does anyone know how much worse things might be? I used some of the stimulus tax breaks to free up cash in my business. I invested in new machines, and I hired new people, carefully. Obviously, unemployment is still way too high, but there has been improvement.

Still, there are a few details that concern me. Once again, I have the sense that not everyone in Washington understands how small businesses work. Part of the plan involves an across-the-board cut in payroll taxes, for employees and employers. I think that will help. It will get money into the system. Perhaps some of it will be spent on picture frames and home furnishings. That combined with the break on depreciation may well allow me, for example, to replace my incandescent light bulbs with LED bulbs, which could cost $50,000 but be far less expensive to operate. The tax breaks may also allow me to expand my market, which will result in my hiring more people. Mission accomplished.

There are additional tax breaks in the plan that are meant to encourage the hiring of new employees. An employer can get a $4,000 credit for hiring someone who has been unemployed for more than six months. It’s a little hard for me to imagine not feeling sympathy for people who fall into this category. There are additional breaks for hiring veterans, and I don’t know how anyone could oppose giving an advantage to someone who left the work force to go to war. And yet, I wonder if, in general, these kinds of targeted breaks really work. Or are they better politics than business.

I guess I would need to see more details, but I have my doubts. Will paying a bonus for the hiring of someone who has been out of work six months be fair to someone who has been out of work for only four months? What incentive does this offer a person who has been laid off for five months? Is this fair to an employer who managed to make it through the last three years with minimal layoffs, but now has to watch a competing company be rewarded for hiring back the people it let go? How long will the person have to remain employed for the employer to get the $4,000? There will probably be a whole industry started on how to game the system.

Rewarding someone for hiring is playing with nature. There really are only two possibilities: either you are rewarding employers to do something they would have done any way, or you are rewarding employers to do something they weren’t sure they wanted to do. Do you remember my comment about avoiding pitfalls? Bad hiring decisions rate right up there with the most serious. A business should hire because of demand, not because of an incentive. Think about this: If a kid’s father offered you $4,000 to hire his kid, would that have any bearing on your decision? Of course not. Why should it be any different if the money comes from the government?

Some people suggest that this credit might help if a business owner is “on the fence” about hiring someone. Here is what I have learned: If you are on the fence about hiring someone, DON’T. Get off the fence. Call more references, interview the person again, make sure you really need someone. Hiring is serious business. If it turns out that you don’t really need someone, you eventually will have to lay off this person. You will be the bad guy, the responsible guy, the guy who pays all of the unemployment insurance. You will have done no one any good. An incentive to hire might not be an oxymoron, but the word moron may enter the equation. Sorry. It has been a long three years.

So, yes, the incentives to hire new employees make me nervous. If we’re going to inject money into the system, I’d much prefer to do it across the board. Don’t try to pick winners. Don’t play with nature, especially human nature. But maybe this is just politics. Maybe this is the price we have to pay to get the boost that the president’s plan offers. I don’t know – and I don’t want to know – the politics.

On balance, I hope the plan passes. But I think I liked things better when small businesses were ignored but did well. This too shall pass.

Jay Goltz owns five small businesses in Chicago.

Article source: http://feeds.nytimes.com/click.phdo?i=f1481a7ded27b279f6825f7ed4aa8682

Filed Under: Small Business Tagged With: , ,