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 ...
Predict unemployment over 10% with this new proposal;
>”February 17, 2009, American Recovery and Reinvestment Act = 111th United States Congress”<
1. Trillion Dollar waste (Stimulus), borrowed Chinese money.
2. 10% Unemployment Rate, 17% Underemployment Rate.
3. $1.5 Trillion Deficits as far as the eye can see.
4. 1.5% GDP, (aka: Apathy in Obamaville).
5. Federal Tax Revenues tumble.
>”May 28, 2003, Jobs and Growth Tax Relief Reconciliation Act of 2003 = 108th United States Congress”<
1. 52 months of Job Creation, a record.
2. 5% Unemployment Rate.
3. $300 Billion Dollar Deficit while fighting two Wars and giving Seniors a Medicare Drug Benefit.
4. 4.5% GDP.
5. Federal Tax Revenues soar 35% from 2003 to 2008.
Wonder what’s going to happen to the Bush tax cuts?
This ‘new’ plan is a head fake. Bye bye to tax cuts.
Been there ...done that
http://online.wsj.com/public/resources/documents/STIMULUS_FINAL_0217.html
“Getting to $787 Billion”
Few of Obama’s strategies actually end up benefitting corporations, small businesses and the working class. This sounds like one of those “few things”. Only problem is, his successful strategies are always “long-time Republican strategies” disguised as new ideas by Obama’s clueless advisors.
This sounds like the 21st century version of the NEP (Lenin’s New Economic Program, which was designed to calm property owners down for a long enough period of time to allow Communism to consolidate.)
Republicans need to hold his feet to the fire on this. Make him and the rats account for every penny of the first stimulus before handing over any more of our hard earned money.
If he's serious about moving the economy his will keep ALL of the Bush tax cuts. Republicans should accept nothing less.
New equipment = more automation, fewer jobs
transfer wealth to the "less fortunate"
funnel money to the unions' failing pension funds
establish rebuilding projects that create union pay-scale jobs
require a new "bureaucracy" in Washington with 100,000 new government workers to administer it
create a new community organizing effort that will employ thousands of ACORN and SEIU workers
“Aren’t capital investments already fully tax deductible?”
////////////////////////////////////////////////////////////
Equipment that lasts for many years is normally capitalized meaning the deduction is spread over many years, Odumbo proposes to allow the whole thing to be deducted the first year. This is treating capital equipment the same as perishable tooling which is normally written off one hundred percent in one year. It is the difference between a drill press and a drill bit. His Brilliance proposes to treat both the same. This may result in some slight increase in capital equipment purchases next year but it will mean a decrease in purchases in following years.
They may have some notion that this will make the formation of new businesses more likely but I doubt it. Contrary opinions are welcome, I am just speculating, I am not an MBA or an accountant.
He is throwing a bone to Republicans hoping to get 50 Billion for unions. I this an admission thay he lied when he said the first “stimulus” was investment in shovel ready projects?
Btw, these are not tax cuts as businesses do not pay taxes on plant and equipment expenditures they depreciate then. These allows the businesses to write the entirety off in the first year. Doesn’t do any good when businesses do not have the confidence to make major purchases.
Obama is up tp his usual BS.
Raise general tax rates permanently, while granting some temporary tax breaks, which will come with more pork and Pelosi tricks. "Beware of Dems bearing gifts!"
[GAAP ain’t just that space between your ears.]
GAAP doesn’t effect tax write-offs, the tax code does. That is why you have M-1 adjustments on your tax return, it is the reconciliation of tax and book (GAAP) differences.
[A short-term bump that’ll be spun as “signs of the recovery”, followed by the same kind of slump we’re seeing in auto sales.]
Notice how this extends through 2011. Just long enough for Barry to get to tout recovery through the end of 2011 and through re-election. Then the economy falls off a cliff again.
Cutting payroll taxes for SMALL to Medium sized businesses would be a start......
Reforming the tax code—flat or fair...would be even better...
Scrapping ObamaCare and the silly cap-n-trade scheme that scares the HELL out businesses would be great.
Obama doing any of these would probably happen about the same time Helen Thomas wins Hooter girl of the year..
Sorry, I apologize for all the typos. I was one hand typing and feeding the baby with the other. :-)
Companies can already write off 100% of their investment in plant and equipment. It is a business expense that offsets profit. Duh.
As others have pointed out, the devil is in the details. The tax credits will probably cause businesses to buy capital items in 2011 that they were planning on purchasing in 2012, 2013, 2014, etc. creating another “cash for clunkers” where all it does is accelerate the buying in the short term. After the tax credits expire, the demand for capital goods drops off a cliff.
Also, there is little doubt that the 100% credit will ONLY apply to “green projects”. It will also depend on if a company thinks that the capital projects will have a customer to buy the goods.
But what I really think is that this is a tax credit for Government Motors and Chrysler to benefit the unions.
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.