Official: Obama to back more business tax breaks

[Fumesucker]

I don't know about you but I was worrying myself sick that corporations might be paying too much in taxes, this move by Obama relieves my mind on this point greatly..

http://news.yahoo.com/s/ap/us_obama_tax_breaks

By JULIE PACE, Associated Press Writer – 7 mins ago
WASHINGTON – President Barack Obama will call on Congress to pass new tax breaks that would allow businesses to write off 100 percent of their new capital investments through 2011, the latest in a series of proposals the White House is rolling out in hopes of showing action on the economy ahead of the November elections.

An administration official said the tax breaks would save businesses $200 billion over two years, allowing companies to have more cash on hand. The president will outline the proposal during a speech on the economy in Cleveland Wednesday.

Amid an uptick in unemployment to 9.6 percent, and polls showing that the November election could be dismal for Democrats, Obama has promised to propose new steps to stimulate the economy. In addition to the business investment tax breaks, he will also call for a $50 billion infrastructure investment and a permanent expansion of research and development tax credits for companies.

The proposals would require congressional approval, which is highly uncertain given Washington's partisan atmosphere and the approaching midterm elections — a reality that's not lost on the White House.

[piratefish08]

1. wow! more change!

yea

[Tierra_y_Libertad]

2. "Trickle down"....again.

[kenny blankenship]

6. That taste..I'm getting a hint of

what is it? Reagan Koolaid or horse piss?

I'm not sure I can tell the difference anymore. Perhaps I've been living in America too long.

[Recursion]

44. How do you figure?

What does "trickle down" mean to you?

[Tierra_y_Libertad]

65. Getting pissed on by the capitalists. Who we pay with our taxes to provide jobs.

Quite a nice gig they got..as usual.

[Individualist]

57. pissed on...again.

What a surprise!

[Brickbat]

3. Excellent! This will certainly continue the almost constant rate of job creation that the last

rounds of corporate tax breaks did! Another thumbs up! *tooth gleam*

[HiFructosePronSyrup]

4. A tax break in capital investments?

Sounds like a good thing to me.

[Fumesucker]

5. Absolutely..

We all know that businesses never use capital investments in things like robots to put workers out of a job so this is a clear win-win.

[HiFructosePronSyrup]

8. Good point, we should fear robots.

I mean, look at those terrifying documentaries. Like Terminator, and Big O.

[Fumesucker]

10. Eh, I rebuild older robotic equipment myself..

But it's a skill that not many have and a job not all that many are capable of doing, it requires expertise in electronics, software and advanced mechanical aptitude as well.

[HiFructosePronSyrup]

18. I hear the Japanese now have robots that do horrible things to teenage girls.

Truly a brave new world.

[Hello_Kitty]

19. IOW, you don't have an argument so you turn to mockery. eom

[HiFructosePronSyrup]

21. I don't think "OMG, robots" was ever really an argument to begin with.

But yeah, mockery.

[Fumesucker]

24. You missed the "things like" part of my statement..

There are lots of ways of trimming a workforce, things like moving the jobs out of the country are often done with capital investment.

ETA: And robots just occurred to me because it's what I do..

[HiFructosePronSyrup]

26. And you're ignoring all the ways it could put people back to work.

Basically, you recycled the old "but it will put used car dealers out of work" argument from the cash-for-clunkers plan.

[Fumesucker]

28. Eh, business is *already* sitting on a hell of a lot of money..

There's really nothing all that much wrong with the supply side of the economy.

Until _demand_ is stimulated by consumer spending there aren't going to be that many jobs created.

[Skittles]

85. stop arguing with a table leg, Fumesucker

or I will beat you with a table leg

[Hello_Kitty]

84. Looks like Robert Reich is all OMG robots too.

Republicans and corporate lobbyists have been demanding tax cuts on corporate investments for one reason: Big corporations are investing in automated equipment, robotics, numerically-controlled machine tools, and software. These investments are designed to boost profits by permanently replacing workers and cutting payrolls. The tax breaks Obama is proposing would make such investments all the more profitable.

In sum, Obama's proposed corporate tax cuts (1) won't generate more jobs because they don't put any cash in worker's pockets (as would, for example, exempting the first $20,000 of income from the payroll tax and making up the difference by applying the payroll tax to incomes over $250,000); (2) will subsidize companies to cut even more jobs; and (3) will cost $130 billion -- money that could better be spent helping states and locales avoid laying off thousands of teachers, fire fighters, and police.

http://www.huffingtonpost.com/robert-reich/why-obama-is-proposing-wh_b_707398.html

[Fumesucker]

20. Yeah, I've been trying to get my hands on one of those..

But they are really hot on the used market and the prices are out of sight..

[doc03]

16. They wouldn't even think of using that capital to

build a new plant in the right to work south or Mexico either.

[Recursion]

41. I fix robots for a living

So that sounds good to me...

[Fumesucker]

52. You and me both..

But it sucks for all the people who don't have our relatively rare skill set, eh?

[mzmolly]

27. Shhhhhhhh.

Some here want to be angry. Please don't rain on the martyr parade.

[Hello_Kitty]

31. And we promise not to rain on your Trickle Down parade. eom

[mzmolly]

33. When someone here preaches trickle down

be sure to rain on the parade. However this is not what the investment tax credit is about. It's about encouraging investment. Obama is not pro "trickle down economics." This has been aptly demonstrated by his policy and his call for rescinding the Bush billionaire tax cuts.

[Fumesucker]

43. As I said, those mattresses must be huge and there must a great many of them..

In order to store all that money that the businesses are holding back on.

We don't need more investment, we are at about 75% utilization of production resources now, what we need is *consumption*.

Companies are not hiring because no one is buying their products, more investment won't fix that, more consumption will.

The simple truth is that rich people don't need as many dishwashers, cars, refrigerators, cups, bedsheets, homes and so on as ordinary working folks do, not even a fraction.

It is the consumption of ordinary working people that drives our economy, not the consumption of the rich..

[Recursion]

45. This is a way to get them to open the mattresses

They're sitting on all that money. Plow it in to a capital improvement and they get a tax break. We have plenty of money mass in the economy; this encourages some velocity.

[Fumesucker]

47. What is the the point of capital improvement if no one is buying your product?

The economy is suffering because average working people don't have the wherewithal to purchase goods and services.

Providing yet more goods and services does not solve that problem.

[Recursion]

49. Capital improvement isn't increase in production

Office furniture. Retrofitting for energy efficiency. New phone systems.

Think better widget assembly lines, not more widgets.

All these things employ people, which puts more demand into the economy.

[Fumesucker]

62. Umm.. better widget assembly lines are more efficient..

An increase in productivity with no corresponding increase in production results in fewer jobs, not more jobs.

There will not be more production until sales increase.

[Recursion]

63. How do more energy-efficient windows or removed asbestos kill jobs?

I'm straining to see that.

[Fumesucker]

66. Is that all that's going to be purchased with these tax cuts?

Energy efficient windows and asbestos removal?

I had no idea the tax cuts were that restrictive.

[Recursion]

70. Certainly very little of it will go for improving manufacturing plant

For reasons you have pointed out several times.

[Fumesucker]

71. Robert Reich disagrees..

Robert Reich: Obama's Proposed Corporate Tax Cuts "will subsidize companies to cut even more jobs"

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9091000

[mzmolly]

60. We need investment and consumption as well as jobs in the US.

I'm not promoting investment as THE key to hiring or economic recovery. The President isn't either.

[Recursion]

42. How is this "trickle down"?

This is motivating businesses to stop hollowing themselves out. That's a great thing.

[JDPriestly]

40. Me too. Although I would like to see it for capital investments

in products made in the USA. Thom Hartmann suggested giving a 100% tax break for the purchase of capital investments of US products and a 50% tax break -- for products made outside the US. That would really give our economy a boost -- but it would also violate our trade agreements. So we would have to break those first.

I think this is a good idea, but without drastic changes to our trade policy, nothing will really help.

[Recursion]

50. I'm giving up on the stuff, personally

I don't think we'll see much office furniture or actual cabling made in the US, not for a while. Somebody has to install and service it, though, and this is great news for them.

[MadHound]

56. You do realize that tax cuts are the weakest way to stimulate the economy don't you?

And it will simply be more debt that this country can do without. If we're going to go into debt, let it be for an economic program that will have much more impact, like say a massive job creation program, not more of these piddly ass tax cuts.

[HiFructosePronSyrup]

64. You do realize that stimulating the economy is a good thing, right?

[MadHound]

82. All the more reason to get all the bang for our buck that we can

Investing our tax dollars in the weakest form of stimulus possible is, at this point in time, irresponsible and foolish. Rather than investing our money into tax cuts and credits why instead invest in jobs and people. That not only has the advantage of being the most efficient form of economic stimulus, but by helping the people you can insure a much better voter turn out this fall.

Sounds like a win-win situation to me.

[dflprincess]

7. Wow! That sounds a lot like the plan the Republican candidate for Minnesota governor came up with!

Originally posted by CatholicEdHead in the Minnesota Forum:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=160x40216

Of course it is coming from a guy who wants to cuts wages for food servers.

http://www.kare11.com/news/news_article.aspx?storyid=870600

"We are budgeting from the point we have today, rather than what government wants to spend," Emmer told reporters, "The $5.8 billion deficit is actually based on what government wants to spend."

First he goes into denial that the huge deficit does not exist in the first place.

Emmer's plan is to cut the corporate tax rate from the current 9.8 percent to 8.8 percent in 2011, and move it down to 7.8 percent in 2012. More cuts would be phased in over time until the rate hit 3 percent in 2015.

Those business owners who file their business profits as personal income would be allowed to subtract 10 percent from their taxable income in the Emmer plan. Those businesses are organized as "Subchapter S" corporations and limited liability corporations.

Emmer's blueprint also calls for lowering the state property tax levy on businesses by a total of $100 million. And rather than asking companies to apply for a refund on business equipment sales taxes as they currently do, Emmer wants those sales taxes waived upfront.

The rest calls for only deep cuts in revenue. The average person does not get a break, just business owners. Step two of course not in today's budget will call for deep cuts in services, infrastructure, and hence overall quality of life (schools, the art community, etc...). As the story goes, the pro-Emmer business owner also admits that there would not be any immediate hiring because of this. It is only a trickle-up budget plan. How can Emmer sleep at night?

edited to fix Kare11 link

[mzmolly]

29. I respectfully disagree. Obama is calling for an investment

tax credit. One that would stimulate the economy and assist in the recovery effort. Emmer wants to cut the corporate tax rate, period.

[dflprincess]

69. Robert Reich disagrees

http://www.dailymarkets.com/economy/2010/09/07/why-obama-is-proposing-whopping-corporate-tax-cuts-and-why-hes-wrong

The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.

In any event, small businesses don’t have enough profits against which to use these tax credits and deductions, and large corporations are sitting on over a trillion dollars of profits and don’t need them.

So why is Obama proposing them? To put Republicans in a bind. If they refuse to go along he can justifiably say they have no agenda other than obstruction. After all, the only thing they’ve been arguing for is lower taxes. On the other hand, if Republicans agree to support these corporate tax cuts, Obama can claim a legislative victory that will help Democrats neutralize their opponents in the upcoming elections.

The proposals also make it harder for Republicans to argue the Bush income tax cuts should be extended for the richest 3 percent of taxpayers because small businesses need it. Obama’s corporate tax cuts would appear to do the trick.

Though I can go along with the idea of putting Republicans in a bind.

BTW - Emmer also claims his plan will create jobs.

[mzmolly]

75. Reich said it will not create mass jobs

and described it as a political ploy. I don't disagree with him on either point.

[Abq_Sarah]

86. With all due respect to Mr Reich

He's not a business owner. He's never had to make decisions about purchases taking the tax code into consideration. His assertion that small business don't have enough profits to make expensing vs depreciation an issue is flat out freaking wrong.

[Hansel]

Not at all.

One is a general tax cut that will likely end up in the business's bottom line and in stockholder portfolios and the other is a tax cut meant to encourage direct investment by businesses to create jobs.

A tax cut is not a tax cut is not a tax cut. Emmer's is for padding pockets so that he can get more donations. Obama's is targeted at creating jobs.

[SidDithers]

9. Ah yes, the anonymous "administration official"...

that has shown to be such a reliable, agenda-free source in the past.

Sid

[Kurt_and_Hunter]

11. This isn't a leak, it's an announcement.

This isn't a leak, it's an announcement. The WH press office and other officials routinely requests anonymous sourcing for official releases of information. Why? Beats me. But they do.

"An administration official said the tax breaks would save businesses $200 billion over two years, allowing companies to have more cash on hand. The president will outline the proposal during a speech on the economy in Cleveland Wednesday."

Leaks do not typically include the date and venue when the President will announce the program.

The speech is already written. The press is given a preview of what will be in it.

[SidDithers]

13. Guess we'll see tomorrow...nt

Sid

[Fumesucker]

12. So we shouldn't post stories from major newspapers?

What exactly do you think we should do with stories like this?

[SidDithers]

15. You should recognize that until Obama makes an announcement...

it's all speculation. Moreso when it's unattributed speculation.

Sid

[FBaggins]

14. Sounds like yet another way to shift future demand into the present...

meaning that future period will have comparably less growth... just like the home purchase credits and the cash for clunkers program.

Little extra growth, but we get to "see" it now rather than later... at a massive expense.

[notesdev]

17. ding ding we have a winnah

you can only pull forward demand so much before it is exhausted, but that's apparently the only tool (other than straight cash bailouts) in the economic policy quiver.

This horrific mess will continue until trade policy is finally back on the table.

[Hannah Bell]

38. +100

[blindpig]

55. The corporate model....

live or die by the next quarter.

Why am I not surprised?

[Autumn]

22. Good job, this is what will work,

again. I would be really happy but I am afraid to smile. There is something warm, wet and yellow all over my head and its getting in my eyes.

[inna]

23. $200 Billion over TWO years??

:wtf:

[mzmolly]

25. It's an investment tax credit.

Meant to encourage investment.

[Fumesucker]

30. But we need something that will stimulate _demand_...

Business is already sitting on a huge pile of money, until demand picks up the economy will remain stagnant.

[mzmolly]

32. I imagine this is why the President is working on other

issues, like rebuilding infrastructure.

[Fumesucker]

34. That is $50 billion..

And if the article is to be believed we are talking about $200 billion in business tax breaks.

When business is already sitting on a huge pile of cash.

[mzmolly]

35. "Sitting on" the cash vs. investing it,

which is part of the problem.

[Fumesucker]

36. It must take a lot of mattresses

In order to hold all that money the businesses have put aside.

[mzmolly]

58. Agreed.

I hope they'll start to invest in America, soon. :hi:

[Fumesucker]

67. That awful Robert Rubin agrees with me..

Robert Reich: Obama's Proposed Corporate Tax Cuts "will subsidize companies to cut even more jobs"

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9091000

[mzmolly]

73. Robert Reich makes the point that the investment incentives

will not create mass jobs. I agree with him on this. Reich does go on to say that this is essentially a political ploy, so if you believe him, you've got nothing to be concerned about. :hi:

So why is Obama proposing them? To put Republicans in a bind. If they refuse to go along he can justifiably say they have no agenda other than obstruction. After all, the only thing they’ve been arguing for is lower taxes. On the other hand, if Republicans agree to support these corporate tax cuts, Obama can claim a legislative victory that will help Democrats neutralize their opponents in the upcoming elections.

The proposals also make it harder for Republicans to argue the Bush income tax cuts should be extended for the richest 3 percent of taxpayers because small businesses need it. Obama’s corporate tax cuts would appear to do the trick.

The White House probably figures even if Republicans agree to the proposed tax cuts, nothing will come of it. Congress will be in session for only about two weeks between now and the midterm elections so it’s doubtful these proposals would be enacted in any event.

[Fumesucker]

77. So it's only a ploy that will piss off the base...

Right before an election..

Must be that 11 dimensional chess again..

[mzmolly]

78. I was under the impression that the so called base

was perpetually pissed off already?

I will say, I am part of the base and I'm not pissed off. I understand the political nature of politics. There is plenty for the base to like about what the President has done and IS doing.

[Fumesucker]

80. Believe it or not, I started off wanting to believe in Obama..

But the team he has put together, particularly on economics and education, are an utter disappointment.

And with three grandchildren education is one of my top priorities.

Not to mention that without a job, economics is also another top priority. I'm trying now to start my own business but it's an uphill struggle and really just a desperation move, I've owned my own business in the past and know how tough it is in the best of times.

[mzmolly]

81. I disagree with how he's

handled much of the education issue as well, quite frankly. I'm not a fan of the teach to the test mentality at all. I also think we needed a much more ambitious jobs package as Krugmann and others pointed out early on. So essentially, I do agree with you that "it's the economy stupid" and until we have jobs, jobs, jobs, all Democrats are in danger in the coming elections.

Peace Famesucker.

[Recursion]

51. In a word, yes: we're bribing businesses to spend their own money

But if that's what it takes to get it moving, that's what it takes.

[madrchsod]

37. the guy does`t have a fucking clue or....

he`s looking for votes at the expense of the party. either way the american worker is still fucked.

[Recursion]

39. A capital investments tax break is a Very Good Thing

As opposed to a no-strings-attached "let us hand you money" tax break.

[Fumesucker]

46. We have a lack of manufacturing capacity in the USA?

I'm amazed at the things I learn on DU every single day.

[Recursion]

48. God yes

Tons of physical plant has just been left to rot over the past two decades.

And there's a lot more to this than factories' plants. This is an encouragement to deliquify some of the Huge Mountains o' Cash businesses are sitting on. New computer systems (great news for people who sell, produce, deliver, and service them). New telecomm (ditto). Office furniture and equipment. Asbestos removal. Design & marketing. Energy-efficient retrofitting. Rewiring. All of these things employ people.

[Fumesucker]

53. That's just my point though..

The businesses aren't really sitting on cash money, it's all invested in something already.

And we are actually at about 75% capacity utilization right now..

That's one of the major reasons so much physical plant has been left to rot, there's far too much of it already. Or at least there's far too much for the number of people who actually work in those jobs at the moment.

[Recursion]

54. So who's saying build more factories?

Take out asbestos. Retrofit windows for more energy efficiency. Install a better phone system.

[Fumesucker]

76. Better phone systems cut jobs..

For secretaries and receptionists..

[Recursion]

83. What companies still have secretaries?

I haven't seen any in years.

[Abq_Sarah]

59. Businesses were already allowed to write off the cost of equipment

The new change will allow them to write it off in the year it was purchased rather than write it off over several years through depreciation.

For instance, If I purchase a new vehicle, office furniture, training equipment for my business this year in cash, I can actually write off the full cost to my company in this calendar year. Without this break, I would only be allowed to write off a percentage of the cost this year and I would be taxed on the remaining "cost" to me as if it were profit even though the money is no longer in my bank account.

This actually is a good thing and it will encourage many to make purchases immediately knowing they won't get hit with a tax bill for money that was used for legitimate business expenses.

[mzmolly]

61. Excellent!

This I did not know. :hi:

[ecstatic]

68. Why did so many people pile on without even understanding

the change? Typical of DU.

[Recursion]

72. "Easy on that pencil, son... make it last a year and it's a capital expense"

My old boss used to joke about that...

[beforeyoureyes]

74. I don't know why the site is on fire because Obama gave a speech

It is a bit disturbing to watch Obama implement the Paulson bailout plan (the greatest pillaging and transfer of wealth from rich to poor in our history) and watch the base he betrayed fall right back into line because he gave a speech.

It is weird.

He is a very good orator, but he has shown that he serves the banks and corporations.

Until I see some concrete actions and a real change of direction from the status quo, words are just more empty rheoteric.

Yes, indeed. Bush was horrible. But, NAFTA happened under a DEM President, and all indications are that this administration is chomping at the bit to extend it to other nations.

[mzmolly]

79. Holding Democrats accountable I see.

Welcome. :hi:

[eridani]

87. Jezzus, how stupid! Put that money into the infrasrtucture bill

Businesses are sitting on a trillion in capital because they don't see any more CUSTOMERS out there, not because their taxes are too high.

[eridani]

88. Jezzus, how stupid! Put that money into the infrasrtucture bill

Businesses are sitting on a trillion in capital because they don't see any more CUSTOMERS out there, not because their taxes are too high.