Obama to Propose Plant and Equipment Tax Write-Off

[TomCADem]

Source: NY Times

WASHINGTON (Reuters) - President Barack Obama will propose on Wednesday that businesses be allowed to write off all their new investments in plant and equipment through 2011, an administration official said on Monday.

The plan, aimed at jump-starting job growth, would cut business taxes by some $200 billion over two years, the official said.

Obama is to unveil the proposal at a speech in Cleveland on Wednesday. The plan would require congressional approval, and with Republicans in no mood to compromise with congressional elections less than two months away, its prospects are unclear.

The proposal is among several the president is to lay out in Cleveland. Administration officials said he will also propose making permanent the business tax credits for research, which the White House projects will cost $100 billion over 10 years and would be paid for by ending some corporate tax breaks.


Read more: http://www.nytimes.com/reuters/2010/09/06/us/politics/politics-us-obama-economy-businesses.html?_r=1&hp

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Why should we give businesses a tax cut for buying plants and equipment instead of simply cutting taxes for the richest 2 percent?

Oh yeah...they have to buy plants and equipment to take advantage, and presumably hire people to use such capital investments.

[Inuca]

1. It will be interesting

to hear the R's arguments against cutting taxes...

[liberal N proud]

7. Exactly!

[defendandprotect]

13. Poor people are going to buy plants and equipment ...? These are tax cuts for rich ...!!

[Psephos]

21. As my grandfather said...

...a poor man can give you a hand, but he cannot give you a job.

He had a point.

[defendandprotect]

22. Why not? If we financed poor workers in buying plants and equipment ....

could work just as well -- !!

[No Elephants]

27. Even one person businesses do buy computers, phones, fax machines, and maybe

something more directly related to what they do,like a back hoe or a snowplow or even a lawn mower.

I would be happier if this were a small business bill, tho. I think middle class people are tired of subsidizing big business of all kinds.

[Inuca]

31. No, poor people WORK

in the plants that use the equipment. ANd I am pretty sure you already knew that.

[Skittles]

2. is that plants and equipment in America?

[customerserviceguy]

4. You beat me to it

If there is a requirement that the equipment they buy is 90% genuine American manufactured, then I'm OK with this.

But there are fraudulent ways of doing this, too. A few years ago, I worked as a temp for a company that made spray pumps for perfume bottles. We loaded hoppers with boxes of stuff marked "Made in France", and when the finished product came off of the assembly machine, it went into boxes labeled "Made in the US". A few seconds in a foreign-made machine, and presto-chango, American made!

[Skittles]

5. like with GM

people think AMERICAN JOBS, not realizing their IT work is done pretty much all over the world except America :thumbsdown:

[No Elephants]

28. Excellent question. If not, it's just more multinational subsidy.

[blue neen]

3. If it puts people to work, so be it.

IMHO, it's a good idea. Sorry, I'm not going to criticize...our president is at least trying to do SOMETHING about unemployment, which is way, way more than Republicans are doing.

[defendandprotect]

19. Belated trying, you mean ... things are desperate now ....

There are many ways to create jobs without looking for excuses to enrich

the already rich!

[JDPriestly]

23. Depending on the details, this could be a very good idea.

The devil is in the details -- as with everything Democrats in Congress do. I expect the Republicans to mess up. I am disappointed when Democrats do. Let's keep our fingers crossed, because as you say -if it puts people to work .....

[sendero]

6. More supply side bullshit...

... it beggars belief.

[TomCADem]

8. You Do Know That A Tax-Write Off Requires You To Buy Stuff?

It is not a tax cut, but a tax write off, which directly encourages companies to buy equipment, which increases demand. If you don't buy, you don't get the write-off. This is better than a tax cut that a company can simply bank. Finally, this is on top of the infrastructure plan proposed by the President, which is definitely demand side.

[PSPS]

9. Sure. But if all the "stuff" is made overseas, it won't do anything but further enrich the rich.

You have to understand that the only thing that will "stimulate the economy" is to increase the demand for American-made goods. Without a "buy American" provision, all this will do is subsidize (at taxpayer expense, natch) the manufacturing sector in other countries where there are no environmental or labor laws and people will work for $1 an hour.

Other countries have tariffs to protect their domestic industries.
Other countries include "buy domestic" requirements in their stiumlus schemes.

We have neither.

This will be a boon for the wallets of the uber-rich and that's about all.

[hayu_lol]

10. Bad, dispicable even, plan to enrich the corportations...

so they increase plant production...who is going to buy what they make. No jobs come from this bail out of dormant industry.

Wish Obama had actually worked in a real job at some point in his adult life.

This makes no new jobs. It reduces the tax base where these plants are located.

Farce...nothing but farce.

[cosmicone]

14. Also,

purchased plant and equipment are useless unless people are hired to operate and service. This will lead to job creation.

[sendero]

24. No it is not..

... it is more stimulus aimed at business which is USELESS when nobody has the money to buy their products.

Business are not failing to invest because it costs money, they are failing to invest because they don't see how increasing production can make them money in this environment.

[No Elephants]

29. Unless it results in jobs for Americans,

I really don't care to subsidize Wal-Mart in China as it buys computers and trucks from Japanese suppliers.

[girl gone mad]

18. Precisely.

What are they thinking?

Capacity is not the least bit constrained right now. This is a demand-side recession.

Fire your entire economic team, ASAP, Mr. President!

:banghead:

[w4rma]

11. Tax cuts to help offset the building of new plants to bust unions at existing plants?

This is supposed to help the American economy, how?

[AlinPA]

17. I don't see what you mean. What does building new plants have to do with busting unions?

[w4rma]

20. If a company wants to move a plant to a right-to-work-state from a unionized state

then they'll need to build a new plant in the right-to-work state.

Similarly, if they want to get out of manufacturing in the U.S., altogether and build a plant in China/Korea/Vietnam/India.

This is why the corporate lobbyists are lobbying for this and you can bet that there will be no provisions preventing this without huge loopholes.

Now can we get away from these huge tax cuts for businesses that are already hording enough cash, as it is, and talk about real help at the DEMAND level? The supply is there, but they know there is no demand.

[AlinPA]

25. Thanks.

[defendandprotect]

12. Last 10 years, 50,000 manufacturing plants closed -- overturn the trade agreements ..!!!

The further question is ALL new investments in plants and equipment . . . . ???

The plan, aimed at jump-starting job growth, would cut business taxes by some $200 billion over two years, the official said.


What has Obama invested in stopping the predatory banking schemes that have created unprecedented

numbers of foreclosures still going on --

And how much LESS than $200 billion is being invested in jobs????

[AlinPA]

15. I wish this had been done last year. Better late than never.

[Luciferous]

16. I hope that there are requirements so that companies don't

use this to buy equipment for their plants overseas.

[nulifelease]

26. Not so sure...

... this will do a damn thing.  Cuts grants and the like are
NOT going to lead to more jobs unless the money given or break
given MUST be used to hire. IMHO this could lead to more loses
through automation.  "This new XYZ will do the work of 3
people"... bye 3 people!  And as for it increasing
manufacturing jobs to build this equipment... it will be spent
on the cheaper Chinese model!

[mmonk]

30. Demand

damn it, is the problem. You can put all taxes at zero, but if people aren't buying, business isn't good.

[4_TN_TITANS]

32. J.H. Christ.... who comes up with these ideas???

You can't tax-cut your way out of a recession. American businesses already pay some of the lowest rates in the world - if they pay at all.

[Jim_Shorts]

33. Free Money

Let me see, if own a company and buy 5 brand new machines for say $5,000,000 to replace 5 older machines and the government pays me back the 5 mil in tax cuts, I can still sell the old machines for say $2,500,000. hmmmm who gets that $2,500,00 ? Oh i'll pocket that money and then i can fire 3 people because of the faster machines. YA THATS THE TICKET Boy i can sure use the money too.

WEEEEEEEEE