The Age of Uncertainty

Michael Franc / December 24, 2010

Entrepreneurs fret daily over economic uncertainty. Case in point: Even with passage of the lame-duck tax deal, they still don’t know what their tax burden will be two years from now.

Approval of that deal lifted what The Wall Street Journal dubs the “world of the temporary tax code” to unprecedented heights. The Journal explains:

The U.S. will have no permanent regime governing levies on salaries, capital gains and dividends, the Social Security tax, as well as a slew of targeted breaks for families, students and other groups. This on top of dozens of corporate-tax provisions that already were subject to annual renewal.

All this uncertainty “complicates planning and discourages hiring and investment” because “businesses tend to be more reluctant to invest when they perceive high levels of uncertainty about various things, including taxes.” (more…)