Obama To Propose Tax Write-Off For Business

[interestrateripoff]

http://www.nytimes.com/2010/09/07/us/politics/07tax.html?_r=1&ref=business

As part of his emerging program to jolt the economic recovery from its stall, President Obama will call this week for allowing businesses to deduct from their taxes through 2011 the full value of new equipment purchase, from computers to utility generators, to increase demand for goods and create jobs.

The upfront deduction would allow businesses of all sizes to keep more money now and would give large corporations, many of which are sitting on cash because of uncertainty about the economy, an incentive to spend and invest.

It would cost an estimated $200 billion in revenues, though the ultimate net loss would be $30 billion over 10 years, administration officials say, since businesses would eventually deduct the depreciated value of the equipment in any case.

The proposal for 100 percent expensing through 2011 will be part of a package that Mr. Obama will outline on Wednesday in Cleveland in a speech on the economy.

The stimulus initiative will also include proposals for an additional $50 billion for infrastructure investments and a new infrastructure bank for projects over the long term, which Mr. Obama described at a Labor Day event in Wisconsin on Monday.

And it will have a provision to expand and make permanent a tax credit for corporations’ research and development expenses; for three decades, the credit has been enacted temporarily, given its revenue cost, and then always extended, but with frequent lapses that frustrate businesses.

Those ideas and others that Mr. Obama may propose on Wednesday have been under consideration at the White House for some time. But August’s mix of disappointing economic data and deteriorating poll numbers for Democrats heading into the midterm elections prompted the president, with evident impatience, to publicly press his economic team to quickly produce options that could help the economy without excessively increasing the debt.

Looks like they are going to try and get everyone spending all at the same time to buy new equipment.

They are running out of ideas.

The big question is if this happens what's left for 2012?

[Errol]

So a country that is hopelessly in debt and running a trillion dollar deficit is going to give huge tax breaks cutting the revenue they would otherwise take in tax?

Another pathetic scheme to spend money they don't have.

[Mega]

Games up & everyone knows it!

[Errol]

And then once all the demand has been pulled forward, what will happen when the scheme ends (like the car scrappage)?

[General Congreve]

So a country that is hopelessly in debt and running a trillion dollar deficit is going to give huge tax breaks cutting the revenue they would otherwise take in tax?

Another pathetic scheme to spend money they don't have.

Personally I think it's a brilliant idea. Well done Obama! It's almost like he's personally working to make me rich, I love him.

[scepticus]

And then once all the demand has been pulled forward, what will happen when the scheme ends (like the car scrappage)?

nirp

[tomwatkins]

Personally I think it's a brilliant idea. Well done Obama! It's almost like he's personally working to make me rich, I love him.

You never miss a trick General.

[brassed off brit]

And then once all the demand has been pulled forward, what will happen when the scheme ends (like the car scrappage)?

What happens is everyone has new cars, everyone has new equipment and demand for such goods for 3-4 years will effectively stop! so they will do a mandatory scrappage scheme for 3 year old cars as in japan, and so on, and so on, creating ever smaller bubbles and ever bigger debt until the economy is as flat as a fart! those who know this will sell as much stuff to as many people/companies as poss then retire on a beach somewhere....mores bubbles is not what america needs right now, but they have ran out of ideas and dont fancy admitting they are broke!

These ideas will make a very few very rich, and a great deal more a great deal poorer in time!

[Kilham]

And then once all the demand has been pulled forward, what will happen when the scheme ends (like the car scrappage)?

War?.

[South Lorne]

http://www.nytimes.com/2010/09/07/us/politics/07tax.html?_r=1&ref=business

Looks like they are going to try and get everyone spending all at the same time to buy new equipment.

...will the small print stipulate ....for items made in the USofA only.....?....

[interestrateripoff]

What happens is everyone has new cars, everyone has new equipment and demand for such goods for 3-4 years will effectively stop! so they will do a mandatory scrappage scheme for 3 year old cars as in japan, and so on, and so on, creating ever smaller bubbles and ever bigger debt until the economy is as flat as a fart! those who know this will sell as much stuff to as many people/companies as poss then retire on a beach somewhere....mores bubbles is not what america needs right now, but they have ran out of ideas and dont fancy admitting they are broke!

These ideas will make a very few very rich, and a great deal more a great deal poorer in time!

The only plan is to create more bubbles they have nothing else to do. There only other option is to admit the truth and tell everyone they've took part in global tulip mania. That simply won't happen the elites will never admit the whole system is one big con based on ever expanding debt.

[ralphmalph]

I am no fan of Obama but this is a sensible proposal and the previous comments illustrate that there are no business people posting on HPC.

A business will invest in effciency gains every year, year in year out. They have to to survive and be competitive especially against Chindia. When budgets are set a capital expenditure budget will be worked out and it will be invested. This is the difference between car scrapage schemes which are consumer investment and a "one off" purchase where demand is pulled forward as oppossed to business capital investment a continuous year on year process.

So a business person sits there and thinks where will I invest my capital this year or over multi years, seeing as we are talking about the US then the choice will be US or Chindia. With the US high cost of labour, Obamacare coming, new Obamaman taxes businesses are not investing the US hence no new jobs being created.

So anything that Obama can do to make US busineses (they are flush with cash) invest in America and create jobs (i.e cut business taxes and costs) is much better for the US economy than indiotic govt stimulus spenidng that is just a completel short term waste of money.

Personally I would like our govt to say we are cutting 50billion of spending and then give 50 billion of tax cuts to manufactures here in the UK in the terms of 10% corp tax and investment in mafucaturing plants (new or requiping) to be very heavily subsidised. Busineses that have to be here like retailers and banks should be taxed as normal.

[SarahBell]

This sort of rings a bell.

Didn't we have something similar in the UK a few years ago for computer equipment?

[MinceBalls]

nirp

scepticus, your posts have got smaller and smaller since you joined the site; from the original 1000 word posts we have got to one word (acronym). Soon you'll be using 1 letter replies

PS: can you remind us what nirp stands for?

[MinceBalls]

Interesting post other than the first sentence which is completely unnecessary!

I am no fan of Obama but this is a sensible proposal and the previous comments illustrate that there are no business people posting on HPC.

A business will invest in effciency gains every year, year in year out. They have to to survive and be competitive especially against Chindia. When budgets are set a capital expenditure budget will be worked out and it will be invested. This is the difference between car scrapage schemes which are consumer investment and a "one off" purchase where demand is pulled forward as oppossed to business capital investment a continuous year on year process.

So a business person sits there and thinks where will I invest my capital this year or over multi years, seeing as we are talking about the US then the choice will be US or Chindia. With the US high cost of labour, Obamacare coming, new Obamaman taxes businesses are not investing the US hence no new jobs being created.

So anything that Obama can do to make US busineses (they are flush with cash) invest in America and create jobs (i.e cut business taxes and costs) is much better for the US economy than indiotic govt stimulus spenidng that is just a completel short term waste of money.

Personally I would like our govt to say we are cutting 50billion of spending and then give 50 billion of tax cuts to manufactures here in the UK in the terms of 10% corp tax and investment in mafucaturing plants (new or requiping) to be very heavily subsidised. Busineses that have to be here like retailers and banks should be taxed as normal.

[CHF]

scepticus, your posts have got smaller and smaller since you joined the site; from the original 1000 word posts we have got to one word (acronym). Soon you'll be using 1 letter replies

PS: can you remind us what nirp stands for?

NEGATIVE Interest Rate Policy

You're penalised for hoarding and not spending the game tokens back into the game

Edited September 8, 2010 by CHF

[Sour Mash]

NEGATIVE Interest Rate Policy

You're penalised for hoarding and not spending the game tokens back into the game

With the official CPI inflation indicator >3% (actual inflation much higher) and base rates at 0.5% we already have negative real rates.