Congress needs to clear up uncertainties surrounding how much businesses
will pay in taxes if the country wants to see high unemployment rates
fall, said Federal Reserve Bank of St. Louis President James Bullard.
Legislative entanglements have made tax burdens anything but clear.
President Barack Obama's Affordable Care Act will raise taxes on investment income in the future, while at the end of this year, the Bush-era tax cuts and other benefits expire at the same time automatic cuts to public spending kick in, a combination known as a fiscal cliff that could throw the country into recession if left unchecked by Congress.
In the meantime, companies are putting off investing in new projects and foregoing hiring in the process, which keeps recovery moving along at a tepid pace at best.
Clearing up tax uncertainty would encourage businesses to draft budgets and strategies and put more people back to work again, bringing the unemployment rate down from its current level of 8.3 percent.
"Congress could show they have consensus, even if it's maybe not the completely ideal policy, but if they had consensus and you knew what the taxes were going to be in the future, then businesses will go ahead and make their bets based on that tax code," Bullard told CNBC.
"What they don't like is the notion they might invest in a business, the business might do well, possibly become a target and get taxed in the future. They don't want to be in that kind of a situation. So I think that that's inhibiting investment."
Legislative entanglements have made tax burdens anything but clear.
President Barack Obama's Affordable Care Act will raise taxes on investment income in the future, while at the end of this year, the Bush-era tax cuts and other benefits expire at the same time automatic cuts to public spending kick in, a combination known as a fiscal cliff that could throw the country into recession if left unchecked by Congress.
In the meantime, companies are putting off investing in new projects and foregoing hiring in the process, which keeps recovery moving along at a tepid pace at best.
Clearing up tax uncertainty would encourage businesses to draft budgets and strategies and put more people back to work again, bringing the unemployment rate down from its current level of 8.3 percent.
"Congress could show they have consensus, even if it's maybe not the completely ideal policy, but if they had consensus and you knew what the taxes were going to be in the future, then businesses will go ahead and make their bets based on that tax code," Bullard told CNBC.
"What they don't like is the notion they might invest in a business, the business might do well, possibly become a target and get taxed in the future. They don't want to be in that kind of a situation. So I think that that's inhibiting investment."
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