State of Union: tax initiatives, infrastructure funding

By Miles Moore, Senior Washington Reporter

WASHINGTON (Jan. 21, 2015) — President Barack Obama's State of the Union address was either wonderful, despicable or somewhere in-between, depending on the viewpoints of various commentators.

In his annual speech before a joint session of Congress, delivered Jan. 20, the president set forth his agenda that included new tax initiatives designed to help middle- and working-class families.

Some of these initiatives would raise taxes on high-income families, including an increase in the capital gains tax to 28 percent from 23.8  and a change in inheritance taxes to require estates to pay capital gains taxes on securities at the time they are inherited.

Among other things, the president also called for funding to restore the nation's crumbling infrastructure, enforceable new trade agreements and a tough, proactive government approach to global warming.

Reactions to Mr. Obama's speech ran predictably along party lines, and the prospect of the president getting most — if any — of his agenda through a Republican-controlled Congress seemed doubtful.

Among non-government organizations, one of the most negative reactions to the State of the Union speech came from Dan Danner, president and CEO of the National Federation of Independent Business (NFIB), who referred to the president as the "Commander-in-Chutzpah."

“Most small business owners aren't wealthy,” Mr. Danner said. “Neither are they helped in the smallest way by higher taxes on anyone else.

“The president's tax plan is fair in the way that hurricanes are fair,” he continued. “They hurt everyone. His goal is apparently to ensure that the tax code hurts everyone. A much better idea, and just as fair, would be to bring small business taxes into line with the biggest corporations and the richest individuals. The goal should be to hurt fewer Americans, not more.”

The National Small Business Association (NSBA) offered a "mixed-implications" assessment of the speach, saying it applauds the president's efforts to expand global trade opportunities but is wary of tax reform proposals that leave out the overwhelming majority of small firms.

“Corporate-only tax reform is a nonstarter for small business,” stated NSBA President and CEO Todd McCracken.

“Eighty-three percent of small businesses are pass-through entities and therefore not only will they NOT benefit from corporate-only tax reform, there is a chance they could lose some current deductions, resulting in a higher effective tax rate.”

On the positive side, the NSBA was encouraged by Mr. Obama's commitment to global trade, specifically the need for Congress to reauthorize the President's Trade Promotion Authority.

As for working with the Republican Congress, NSBA Chair Tim Reynolds, president of Tribute Inc. in Hudson, Ohio, said: “Despite positive economic gains, we still face some very serious problems, including our ever-rising debt. Comments about reaching across the aisle must be more than empty gestures if we hope to gain any traction on these issues. Both sides should work on building important bridges across the aisle.”

On the other hand, the United Steelworkers (USW) union was mostly though not totally pleased with Mr. Obama's speech.

“From saving America's auto sector from bankruptcy, to reforming our financial system, to expanding access to health care, President Obama deserves enormous credit for his leadership,” said USW International President Leo W. Gerard.

But while Mr. Gerard said the USW agreed with most of the president's agenda, it had to oppose him on trade.

“USW members, their families and their communities have had to pay the price for past trade deals and today's outdated policies,” he said. “America cannot afford more of the same.”

Scott Paul, president of the Alliance of American Manufacturing (of which the USW is a member), expressed similar views about Mr. Obama's trade policies.

“I'm still baffled as to why the president is pursuing a Trans-Pacific Partnership (TPP) trade agreement without addressing the very serious issue of currency manipulation, particularly with Japan,” Mr. Paul said.

“By ignoring the concerns of industry, workers and majorities of the House and Senate, he's not only putting the TPP at risk, he's putting a whole lot of auto jobs in the U.S. at risk, too.”

Pete Ruane, president and CEO of the American Road & Transportation Builders Association, said investments in surface transportation and infrastructure were long overdue for bipartisan consensus.

“However, policy legacies won't be earned with more short-term gimmicks and temporary patches of the Highway Trust Fund,” Mr. Ruane said in a press release issued after the State of the Union. “It will require Congress and the president to enact a long-term revenue stream to ensure state governments have the reliable federal partner they need to make overdue improvements to America's roads, bridges and transit systems.”

The Arlington, Va.-based American Trucking Associations (ATA) said in a Jan. 21 press release that it is disappointed that President Obama failed to present a detailed outline of a long-term, fully funded highway bill in his address.

“Just mentioning infrastructure is not a solution to our nation's critical needs,” said ATA President and CEO Bill Graves.

“By simply bringing up the topic without details, President Obama missed an opportunity to underscore the critical role our highway system plays in our economic well-being.”

Mr. Graves called on President Obama and Congress to act quickly to pass a new highway bill and prevent the Highway Trust Fund from going bankrupt. The current short-term highway measure funds the Highway Trust Fund only through May 2015.

In a lighter moment, when some in the audience applauded his statement that he had no more campaigns to run, President Obama delivered a retort reminding that he had “won both” of his campaigns.

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