By Curtis Dubay – The Foundry (Posted in The Washington Times)
The uncertainty caused by Taxmageddon—the one-year $494 billion tax increase that looms on January 1, 2013—is strong enough to slow the economy months before it actually strikes. In fact, it is already doing so. …
The first warning came from Mohammed El-Erian, CEO of Pimco, the world’s largest bond fund. Writing in The Washington Post, he bluntly told Congress that the longer they wait to stop Taxmageddon, the more likely it is that markets will start to slow.
The uncertainty is slowing the economy because businesses, investors, and entrepreneurs can’t plan for the near future. They can’t because they don’t know what their taxes are going to be in just a few months.
If they don’t know what their taxes will be, there is no way for them to determine if their potential job-creating investments would be profitable. Without being able to make that vital calculation, there is no way they can move forward on projects that would speed growth and create much needed jobs. So they’re sitting back, waiting for Congress to provide some certainty.