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Social Security is running a surplus of $77 billion this year1 and amassing a trust fund large enough to last through the peak retirement years of the Baby Boomers. Social Security can only spend what it receives in tax revenues and has accumulated in its trust fund from past surpluses and interest earnings. It cannot add to the deficit if the trust fund is exhausted because the law prohibits it from borrowing (if current revenues and savings in the trust fund are not sufficient to pay promised benefits, these have to be cut). Though modest changes will be needed to put Social Security in balance over the 75-year planning period, the projected shortfall is less than 1% of gross domestic product (GDP).

For small businesses, taxes are a financial and administrative burden that directly impacts their ability to invest in their business, their employees, and compete in the broader economy. In fact, 77% of small business owners reported that federal business income taxes were very or moderately burdensome according to NFIB’s 2021 Tax Survey. This was followed by payroll taxes (69%) and state and local income taxes (66%). The survey also found that 64% of small business owners reported that federal business income taxes create an administrative burden in operating their business. Payroll taxes (60%) and state and local income taxes (58%) followed.[1]

Tax related issues also rank high among small business problems. Of the top ten most burdensome problems small business owners report, four are tax related. At the top of the tax list, federal taxes on business income ranked as the third most severe problem, with 20% reporting it as a critical issue. Property taxes followed in fourth place, state taxes on business income ranked seventh, and tax complexity ranked eighth in problem importance.[2]

In relation to the effects of institutional instability on business confidence, the results suggest that unstable environments can deteriorate the entrepreneur’s optimism. The coefficients on GOV are negative in most of the models and significant in half of them. The negative evaluation of the actions and policies of the federal government indicates to the entrepreneurs an unstable and volatile environment, undermining their confidence. Although the coefficients on TOR have not presented statistical significance, the negative sign is predominant which in turn suggests that the institutional instability of the central bank can affect negatively the entrepreneur’s confidence. Finally, the coefficients on subprime are negative and significant in all models, thereby leaving no doubt that a crisis of this dimension deteriorates business confidence.

“Corporate executives want two things: they want predictability and the ability to run their companies without undue interference from regulators,” Cramer explained. “Kavanaugh is going to give these businesses exactly what they want. He’ll be viewed as a judge who keeps regulators on a short leash, strictly interpreting only what the Congress has asked them to do and nothing else.” But the stock market might not feel the effects of having a right-wing judge on the Supreme Court for some time, Cramer said. In other words, Kavanaugh’s nomination is not a reason for investors to go out and buy stocks today. “But over the longer term, this pick does suggest a solid conservative block on the Supreme Court that will favor corporations over regulation and smaller government over bigger government,” the “Mad Money” host said. “That creates a level of judicial certainty that I believe will make it easier to pick stocks, even if you hate the direction this court is going with every fiber of your being,” he continued. “I say you don’t have to like it to profit from it.”

Blanchard (1990) provides a simple model that illustrates this point. Stabilization that eliminates uncertainty about higher fiscal costs in the future stimulates demand today—especially from investors, who are more sensitive to uncertainty given the long-term nature of their plans. In their models, Blanchard (1990) and Alesina and Drazen (1991) do not distinguish between stabilization on the tax and the spending side. However, it is quite likely that the benefits of removing uncertainty are more likely to occur with spending-based, rather than tax-based, austerity plans. A tax-based plan that does not address the automatic growth of entitlements and other programs over time is much less likely to produce a long-lasting effect on the budget. If the plan doesn’t address automatic spending increases, taxes must be continually raised to cover the additional outlays. So the confidence effect is likely to be much smaller for tax-based plans, because of rising expectations of future taxes. Spending-based plans, on the other hand, produce the opposite effects. Our finding for the response of business confidence to austerity supports this view. Business confidence increases immediately at the start of a spending-based austerity plan, in contrast to what happens at the beginning of a tax-based plan.

Another set of explanations relates to the supply side of the economy, which reacts very differently to tax hikes and spending cuts. The persistence of the fiscal policy change is also crucial to any austerity plan and works in opposite directions depending on the type of plan. We found that a tax-based plan that lasts longer produces a deeper recession. One explanation is that without a reduction in spending, tax hikes must be long-lasting, producing long-lasting negative effects—for instance, on labor supply and investment—because of higher distortionary taxes. In contrast, a longer-lasting spending cut produces a milder recession because it signals that sooner or later it will be possible to cut taxes and the associated distortions.

For small businesses, taxes are a financial and administrative burden that directly impacts their ability to invest in their business, their employees, and compete in the broader economy. In fact, 77% of small business owners reported that federal business income taxes were very or moderately burdensome according to NFIB’s 2021 Tax Survey. This was followed by payroll taxes (69%) and state and local income taxes (66%). The survey also found that 64% of small business owners reported that federal business income taxes create an administrative burden in operating their business. Payroll taxes (60%) and state and local income taxes (58%) followed.

Tax related issues also rank high among small business problems. Of the top ten most burdensome problems small business owners report, four are tax related. At the top of the tax list, federal taxes on business income ranked as the third most severe problem, with 20% reporting it as a critical issue. Property taxes followed in fourth place, state taxes on business income ranked seventh, and tax complexity ranked eighth in problem importance.

Taxes. Almost no other word injects as much fear into the hearts and minds of small business owners than this one—no exaggeration. According to score.org, 40% of small business owners say taxes and bookkeeping are the worst parts of business ownership. Considering that 99.9% of all U.S. businesses are small businesses, that adds up to a lot of dread.

But is that sense of fear and dread well-founded? Consider this—even the federal government knows there are problems with compliance. According to the U.S Senate Committee on Small Business & Entrepreneurship “small businesses spend 2.5 billion hours complying with IRS rules each year. For entrepreneurs, time is one of their most valuable resources. Every hour spent filling out forms or navigating confusing tax rules is an hour they don’t spend marketing their products or thinking about how to grow their business.”

An increase in government investment lowers consumer confidence. Whereas when the debt ratio is high it has negative effects on both consumer and business confidence. A higher government wage bill lowers both consumer and business confidence, with the effect on consumer confidence being stronger at times of high debt and on business confidence at times of low debt. The government wage bill and government investment exert a negative effect on confidence indices possibly because they entail a permanent increase in the size of the public sector, which would have to be financed by future taxes. In the case of public investment the standard Keynesian crowding out effect is also at play. On the contrary, an increase in the non-wage government consumption improves consumer confidence, whereas it improves both consumer and business confidence when the debt ratio is high. This could be linked to the fact that this type of spending is easily reversible if needed so.

For all the other Member States that were not included in the first group we could reach conclusions regarding the influence of tax policy and tax reforms on business confidence for at least one of the sectors that we included in our analysis. In most cases an increase in taxation would lead to a decrease in business confidence: a higher direct tax burden would have a negative impact on business confidence in Croatia, Lithuania, Hungary, Austria, Poland and Slovakia; an increase in indirect taxes would negatively impact business confidence in Denmark, Germany, Greece, Cyprusand Sweden; higher social security contributions could diminish business confidencein the Czech Republic, Denmark, Germany, France, Italy, Latvia, Luxembourg, Slovenia and Finland. As an overall conclusion, the social security tax burden seems to have the greatest impact on business confidence in European countries.

“The way we fund the Social Security system, I think, needs to be examined. What we fund it for, chronic or long-term care, has not been addressed, and that’s one of seniors’ major needs,” he told NBC’s “Meet the Press.”

Thomas dismissed the idea of raising the limit on payroll tax deductions from the current $90,000, which would make wealthier people pay more into the system. “Why even bother looking at the payroll tax? That was a solution in the 1940s and the 1950s,” he said, when the rate was 2 percent of income.

The government is taking a bigger bite of American workers’ paychecks this year, which could mean another slowdown of the U.S. economy.

American workers are paying 2 percentage points more in Social Security taxes this year after Congress and President Obama allowed the Temporary Payroll Tax Cut to expire on Jan. 1. The slight increase means that workers, on average, will see $18-$20 less a week in their take-home pay.

The final version of the PFML Mandate comes with a $1.5 billion per year payroll tax hike on small business owners, workers, and others and up to five months of paid leave per employee every year.

The bill got worse for small business owners in conference committee, with the Minnesota Department of Employment and Economic Development gaining the ability to unilaterally increase the payroll tax in the first year of the program. The tax can increase every year, up to a maximum of 1.2% of FICA employee wages per year.

Social Security Expansion Act’s Widespread Economic Consequences

Senator Sanders stated that the Social Security Expansion Act will not raise “taxes by one penny on over 93 percent of American households that make less than $250,000.”20

OAKLAND, Calif. - May's job gains of 339,000 were surprising, unexpected and across all sectors of the economy. They are so high, they might be considered inflationary.

Resolution of the debt ceiling was so important, enormous job growth did not phase the stock market which finished way up on Friday.

-8% of small business owners reported higher sales in the past 3-months (1 point better than April) and the percentage expecting higher sales dropped 3 points to -21%.

-50% of business owners are expecting better overall business conditions (1 point worse than April and 11 percentage points better than a year ago).

Business activity across the US service sector grew at a sharper pace in May, according to the latest PMI™M data from S&P Global. Output rose at the fastest rate for just over a year, supported by a strong expansion in new business. The upturn in new orders was driven by improved demand conditions in both domestic and export markets. At the same time, firms stepped up their hiring activity again, with employment increasing at a solid pace. Sufficient capacity to process incoming new business allowed companies to reduce backlogs of work for the first time in four months. Meanwhile, business confidence picked up to the highest level in a year, albeit still weaker than the series average.

On the price front, rates of both input price and output charge inflation softened since April though remained elevated.

All US Sales Managers Indexes exhibited significant growth in June. All Indexes remain over the critical 50 ‘no-growth’ line, so the overall picture is positive, reflecting a wide spectrum of increasing economic activity.

Both the Sales Growth and Market Growth Indexes moved sharply upwards, to 52.9 and 53.6 respectively, indicating rapid growth in the month.

The US economy's growth forecast was also revised up, to 1.2 percent from 1 percent, as consumption and job growth remain robust.

Confidence among U.S. small-business owners improved in the month of May, even though inflation returned to be their top operational concern, followed by labor quality.

The National Federation of Independent Business said Tuesday that its small-business optimism index increased to 89.4 in May from 89.0 in April, well below the index long-term average.

WASHINGTON, June 13 (Reuters) - U.S. small business confidence rebounded in May, but worries about the economy's outlook and inflation remained, according to a survey released on Tuesday that also showed businesses still eager to hire more workers.

The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose 0.4 point to 89.4 last month. It was the 17th straight month that the index stayed below the 49-year average of 98.