Posted on 09/06/2010 7:27:32 PM PDT by Blood of Tyrants
President Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to write off 100 percent of their new investment in plant and equipment through 2011, a plan that White House economists say would cut business taxes by nearly $200 billion over two years.
The proposal, to be laid out Wednesday in a speech in Cleveland, tops a raft of announcements, from a proposed expansion of the research and experimentation tax credit to $50 billion in additional spending on roads, railways and runways. But unlike those two ideas, both familiar from Obama's 2008 campaign, the investment incentive would embrace a long-held wish by conservative economists that had never won support from either Republican or Democratic administrations.
(Excerpt) Read more at foxnews.com ...
LOL!!
Therin is the rub, these companies need paying customers, which is in short supply these days.
A tax credit for investing in the businesess assumes that you have spare capital available to invest.
If you’re running to just make payroll and not get swallowed up by debt, this is meaningless.
What entrepreneurs and most good businessmen want is FREDOM but they will never understand that..............
But, by itself, to allow full expensing of CAPX and R&D is a great idea for stimulus. Lot's of conservative economists were calling for it last year.
This would only effect accoutning for tax purposes, not financial reporting purposes. Captial investment is already treated differently for the two, with must faster depreciation allowed for tax purposes. This proposal would only accelerate it further, an making it immediate.
Not immediately. Currently, you have to depreciate the asset over time, and you can only write off the depreciation charge in a given year. Effectively, this proposal would just shift all of the writeoff to the current year.
Glad to see not everyone here is succubming to knee-jerk anti-Obamaism.
Yes, but it will only work for companies already planning to spend the money and who have it to spend. And then it will only serve to accelerate the spending for 2012 and 2013 to 2011. In essence, it is another cash for clunkers deal for people who are already in the market and planned on spending the money anyway.
Medium and large corporations are piling up record amounts of cash. There is no lack of money to spend.
And then it will only serve to accelerate the spending for 2012 and 2013 to 2011.
True, but it will still help. If you increase demand for capital goods today, you put to use unemployed resources today, which in turn raises national income, which leads to more demand for capital projects, which puts more unemployed resources to work, etc. That is how stimulus is supposed to work.
Corporations only "pay" taxes if they make a profit, which only happens if consumers pay enough in prices for the corporations' product to cover the cost of the taxes. So, corporate taxes are PAID by consumers and merely collected by the corporation. Most people who take an economics class in high school or college learn this simple fact during the sessions on taxation and forms of businesses.
Businesses that dare enter the web will become entangled. Lets have more businesses become dependent on the state so they can dance when the state pulls the strings.
Sounds like a plan. (That sucks the life out of capitalism)
At best, a one-shot injection. The problem is that even though the tax benefit may be attractive in the short term, the longer outlook for the economy is still pretty dismal.
I wouldn’t be basing my business strategy on a tax cut.
So I should lower my prices and lay off my remaining employees to make less profit? IOW shut my business down.
Now there is a way to pay no corporate taxes!
Incidentally, I’m an Engineer with a business degree.
The problem is Obama. Businesses are holding onto their cash because they are uncertain what the future will bring. And as long as he is in charge of all the government agencies that can ans will literally regulate many, many businesses out of existence, they will not take as many chances.
Glad to see not everyone here is succubming to knee-jerk anti-Obamaism.
The string attached is what happens in 2012 after you have been dancing to the tax man's tune. Remember, this administration has not done a SINGLE DAMN THING without strings attached. Why would you believe them now?
I agree. However, the proposal to allow immediate expensing of CAPX will still help.
The string is going to be the tax rate in the highest 2 brackets going up, and I agree it is not worth it. However, if the GOP can seperate out the CAPX expensing provision, then it would be worthwhile to vote for it.
If corporate taxes were eliminated tomorrow, would you offer your service for the same price? Would all of the people offering the same service keep their price the same?
If I was competing for customers, I would surely drop my price if the corporate tax went away.
Say you charged $150.00 for your service and I now charge $100.00 for the same service. Why can the customer get a better deal from me? Because the tax imposed by the the government has gone away.
If the corporate tax doubled tomorrow, how high would you have to raise the price for the service you offered to continue making money?
Doesn’t the consumer of your service or product end up paying the corporate tax though inflated costs for products and services?
Yea, it’s great for people who were planning on spending the money anyway. But as with every tax break that Obastard suggests, it is only temporary while all his tax increases and wealth stealing regulations are permanent.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.