Baucus-Grassley Tax Increase Could Have a Negative Effect on the Economy…

For Immediate Release:

The Independent Women’s Forum warns that passage of the proposed Baucus-Grassley tax increase on publicly traded partnerships, which has been introduced before the U. S. Senate (S. 1624), could have a profoundly negative effect on the American economy, and not just for the rich.

Although a tax on equity and hedge funds that go public might appear at first glance to be irrelevant for the vast majority of U.S. taxpayers, this is decidedly not the case. The most immediate impact would be that small fry investors would be denied entry into successful funds when managers refrain from going public to avoid Baucus-Grassley.

Many potentially lucrative IPOs (initial public offerings) which can be sterling investments for retirement simply would not be available for ordinary investors. Thus a tax designed to punish the nation’s most successful money managers would affect a far larger segment of the population.

The Baucus-Grassley tax would hinder creativity and stifle the U.S. ability to compete in the global market and ultimately this would have a negative impact in countries around the globe. Only economic expansion keeps unemployment rates low, and this tax would have a dampening effect on economic activity.

Perhaps the most compelling reason to fear this tax, however, is that it is an extremely high tax rate. High tax rates tend to set a precedent and have a trickle down rate effect that could eventually justify higher tax rates on all of us.

Ironically, this tax is not needed. The U.S. tax revenue has set record highs several quarters since the Bush tax cuts have had time to take affect. In addition, the corporate tax base is in no danger of collapsing. It is important, in making any changes in the tax code, to adopt ones that lead to economic expansion, not contraction.

The tax increase proposed by Senators Baucus and Grassley would lead to economic contraction and a slowing of the U.S. economy.