Obama to propose $300 billion in tax breaks for business

[GeorgeGist]

Source: McClatchy Newspapers

WASHINGTON -- President Barack Obama on Wednesday will propose $300 billion in accelerated or expanded tax breaks for business, a jolt of cash that he says would jump-start hiring and help revive the nation's economy.

Speaking in Cleveland, Obama will ask Congress to send $200 billion in tax cuts to businesses by allowing them to write off more of their costs through 2011. He'll also propose expanding and making permanent a tax credit for research and development. That would cost $100 billion over 10 years.

The proposals are part of Obama's weeklong pitch to show the country that he's aggressively pushing new and recycled proposals to help create jobs. On Monday, he proposed $50 billion in quick federal spending to repair roads, railways and runways. On Friday, he plans a White House news conference, very likely to include questions about the economy.

His Democratic Party faces potentially big losses in November's elections for control of Congress, driven by voters' worries about the economy.



Read more: http://www.miamiherald.com/2010/09/08/1813892/obama-to-propose-300-billion-in.html#ixzz0yxRKpBY1

Read more: http://www.miamiherald.com/2010/09/08/1813892/obama-to-propose-300-billion-in.html

[no_hypocrisy]

1. I get the feeling businesses weren't going to pay those taxes in any case but

this way, Obama gets something in return for the illusion of tax breaks.

[defendandprotect]

2. More corporate subsidies . . . ??? Btw, when are we going to stop religious subsidies?

I'm sure the Vatican needs our dough, but we have this Constitution which

says otherwise --

[Name removed]

4. Deleted message

Message removed by moderator. Click here to review the message board rules.

[droidamus2]

28. Think the idea is

I read somewhere, I think it was here on DU, that this is the idea. When the conservative$ call for lower taxes and say it generates new jobs they are wrong because there is no incentive for these people to create jobs the incentive is to make as much as you can (sometimes by laying of workers because that is a cost) because you are now paying lower taxes not spend it creating jobs for other people. So the right way to do it, if you want make sure they create jobs, is raise their personal taxes (I think it should be a lot higher than 39%) and then give them business tax breaks for creating jobs and investing in equipment and research. Makes sense to me.

[madmax]

54. +1

[AngryAmish]

3. sigh. Some may call this corporate welfare.

[Blue_Tires]

9. tomorrow the wall street journal op-ed page will still call him an "anti-market bolshevik"

[pdefalla]

5. It won't work

Big business has already shown that increased profits will not result in more jobs. Look at BP, who made record profits last year (obscene, jaw-dropping profits), and they cut their work force by 28%. Throwing 300 Billion dollars at corporations accomplishes nothing except to improve their profits. It will not even have the desired effect of lessening corporate opposition to Obama's administration. Only 50 billion for infrastructure which WILL create jobs? This sucks

[4_TN_TITANS]

29. I agree...

any more cash thrown at business will only be applied to their profits. Is it that hard to understand that when you put money in the hands of the people, businesses HAVE to hire to keep up with demand or risk being left behind?

[DoctorK]

52. Do we need more debt?

BP's profits go to stock holders in dividends, like British pensioners, and funds their retirement. That money gets spent, and I don't have a problem with it.

My problem with this bill is two fold:

1st - It encourages another $300 billion in borrowing, when the problem is that as a nation we are already too indebted. This debt is to be fostered by $30 billion dollars deposited by the Treasury in banks the Secretary picks. Through the manipulations of fractional reserve banking $270 billion will created from 'thin air' and injected into the economy. This will benefit the first receivers of that money, but you, and I, and everyone else will simply see their purchasing power reduced by $270 billion dollars after prices adjust to reflect the new balance between goods and dollars.

2nd - It allows the Secretary to make unilateral and retroactive changes to agreements entered into with the banks under the laws passed in the last two years. This kind of arbitrary power and policy uncertainty isn't going to help the unsteady business climate.

[indepat]

6. Will such as this permanently dip the effective corporate tax rate to less than zero,

effectively making large, highly profitable corporations the recipients of welfare via the tax code. Now just how special is this? :)

[zogofzorkon]

7. 50 billion for the workers, 200 billion for the masters, 100 billion R&D

roughly 20 million businesses, 140 million workers. for 10 points and a trip to the soup kitchen who will benefit the most?
A. The worker
B. The business owner

I

[Better Today]

8. Exactly right. The businesses that need help, won't be paying taxes

anytime soon anyway because of lack of sales, so this will only help those that already weathered the storm and really don't need help.

[phantom power]

10. *sigh* -- Even democrats have been assimilated by the supply-side cult.

x(

[pasto76]

15. sigh - the economy runs on many switches, tax breaks is one of them

judiciously applied to regular business owners they do provide some boost.

[phantom power]

16. That lever can't work in this climate. Demand is too soft.

Why would decreasing payroll taxes cause an employer to pull the switch on hiring, if he looks around and sees that demand is flat? Hiring a couple new people isn't suddenly going to make more customers walk thru the door.

:shrug:

[defendandprotect]

17. $50 billion to create jobs...thru corporations -- and $300 billion in subsidies for corporations???

Obama's economic theories are way out of balance!!

We even bailed out foreign banks!! Time to bail out workers and unemployed --

homeless and impoverished Americans!!

[mzmolly]

11. Spending and investment incentives.

Ed Schultz liked this idea, so do I.

[groundloop]

12. This is actually a good idea, it should help spur R&D and grow jobs

Businesses only get to take a tax write-off if they spend money on R&D, building new plants, installing new equipment, etc. That's what JOBS are made of.

It's also brilliant in that the Party of NO won't dare say no to this.

[defendandprotect]

18. It's a bad idea -- from every aspect -- including creating jobs and improving economy ....

This is simply more corporate welfare --

compare it with $50 billion to creeate jobs thru corporations --

vs $300 billion in DIRECT WELFARE TO CORPORATIONS!!

[KittyWampus]

32. Small businesses are responsible for 75% new jobs.And they are corporations.

[Hawkowl]

13. Obama needs a time out

He needs a dunce cap and some time in the corner to ponder on all the jobs that previous tax cuts have generated! Idiot supply side economic bullshit.

[defendandprotect]

19. I'm looking for a big time out for Obama in 2012 ... we need a liberal candidate ....

[Hawkowl]

21. I keep saying it

I don't think Obama is going to run. Primarily because the economy is going to be in even worse shape. Supply side, free trade, free market, corporate give aways are going to guarantee it.

I was just thinking this morning that if Clinton can pull off a Palestinian/Israeli peace treaty, she will be the next president in 2012. So I then consoled myself thinking that we would need a real hard core liberal as a v.p. such as Dean or Grayson. In any case, I think a good strategy for liberals is to push for a new VP.

[defendandprotect]

25. Hillary is more DLC-corporate wing -- she's part of DLC leadership ...

Biden I wouldn't trust with anything -- we have Clarence Thomas on the SC because of

Biden's sly dealing and betrayal of Prof. Anita Hill's lawyers and witnesses.

Also hails from corporate Delaware!

You really have to keep your eye on the VP spot -- that's how Nixon came up -- how

Poppy Bush came up -- how Lieberman could have moved in on his Trojan Horse --

DU has to make up its mind about politics -- if wars are bad when W did them, then they

are just as bad when Obama does them. If corporate welfare is bad when W did it, then

corporate welfare is also bad when Obama does it.

We have to toss the DLC and keep targeting rw Dems!!

[pasto76]

14. as a sole proprietor, this would be really good

I make do with old and underpowered equipment right now. When equipment fails, it is a big setback to buy a new one, or have it fixed. Small businesses arent supposed to struggle with stuff like that.

I see alot of responses above about "corporate this and that" - there are many businesses out there that arent "big bad corps" that could really use these breaks. besides, giant corps dont pay taxes already, but most of us do. I feels like most of the scoffing is really spite.

sgt pasto

[girl gone mad]

20. No spite, just more dashed hope.

I don't think that you are representative of the majority, or even a large minority of business owners.

Most businesses have more capacity than they can handle right now. They have no need to invest in new equipment, and even if they did, taxes aren't preventing them from making that investment.

We should be helping people who want to work, but can't find work. Stimulating production shouldn't have even been on the WH's radar screen. We have too much underutilized capacity as it is. We need to get some bodies in those shut down factories, working on green tech or whatever pursuit might be useful. Incentivizing corporations through tax breaks is probably counterproductive.

[ClarkUSA]

24. "dashed hope"??? Oh please.

Since when did you ever have a shred of "hope" in Obama? :eyes:

[ClarkUSA]

22. Of course it's spite. Some people make a habit of demonizing any of Obama's legislative efforts. nt

<< as a sole proprietor, this would be really good >>

You're 100% correct.

[paulk]

27. you can deduct it all in one year using section 179

up to $100,000 - if you've got more than 100k in equipment deductions, you need to seriously look into incorporating.

If you take advantage of this program by buying new equipment, will you use the savings to hire more people? The biggest criticism of this bill is that it won't create new jobs.

[KittyWampus]

33. Yes, as a small business owner, we can use the help.

[ClarkUSA]

23. Freeing up cash to invest in growth will create jobs and increase demand for goods.

Obama to Propose Tax Write-Off for Capital Investments

WASHINGTON — 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.

http://www.nytimes.com/2010/09/07/us/politics/07tax.html?hp

In addition, as has been noted by an earlier poster on this thread, this policy would help those in who are in small business as well.

[defendandprotect]

26. Turning $$ and tax breaks over to elites doesn't create jobs .... it gives subsidized

corporations a leg up on already existing businesses and their employees --

and it puts money in elite pockets -- NOT pockets of ordinary citizens.

We need to overturn the trade agreements and recapture the jobs they sucked out

of the country . . . so that corporations could get on with their "harvesting

slave labor around the world." Subsidized by US government!!

Time for change -- this isn't it!!

[KittyWampus]

34. I and many other small business owners aren't "elite". Your view of reality is absurd.

[Redstone]

40. God, yes. From one small-business owner to another, I thank you

for that post.

My God, I've had to contend for over 30 years with people who think that owning your own business is a walk on the beach (with a basket of peaches) and even moreso if you have your office in your house.

You understand, and I appreciate that.

Redstone

[WinkyDink]

30. If only that "jump-start hiring" could be mandated, so the money isn't hoarded.

[Robb]

36. One can only hope

...the economy isn't so completely tuckered that businesses think hoarding is the best move.

"You have to spend money to make money" is the idea. Businesses want to grow, they don't grow if you hoard capital. :shrug:

[WinkyDink]

38. I'm somewhat jaded by reading of companies already sitting on cash, basically to

try to extort from Obama the end of the Bush tax-cuts.

[KittyWampus]

31. Smaller. local businesses can use tax breaks. We are one such business. It's sick how DU'ers

AND politicians never seem to be able to distinguish between multi-national corporations and small, local businesses.

[MadHound]

35. So essentially we're going to piss away billions of dollars, again.

Tax cuts and tax credits are the least effective form of economic stimulus. In these desperate economic times, we would be better served by pursuing the most effective form of economic stimulus, which is direct job creation.

Yes, I recognize that fifty billion of this is for just that, but the rest of the money is more of the same old worthless shit that got us into this mess to begin with.

How can such a smart man be so damn dumb?

[librechik]

37. Only because he's so anti business, like all Democrats

erm--What???

(seriously, that's been the response from the Right, where Obama can do nothing right. What if he promised to extend the Bush tax cuts indefinitely? They would object to that too, no doubt, somehow, even though it';s what they want. Then they would both have what the want, and have the President as their slave. Would that make them happy? I think not! Not until they crown Grover Norquist absolute monarch!

[Redstone]

39. Who pays your salary? A BUSINESS does. Who makes the things you buy? A BUSINESS does.

Case closed.

Redstone

[B Calm]

50. Who pays your salary? Consumers. Who makes the things you buy? Demand for a product.

Case closed.

B Calm

[2critical]

41. Poor businesses; they just pay too many taxes

So, let's just stick the working and middle classes for more. Or, we can run up debts for our kids. God knows the poor, poor businesses pay more than their fair share. *sarcasm*

[jtuck004]

42. This is a bit like finding someone gut-shot at the bottom of a ravine and

running off to buy them long-term health insurance. Are they likely to need it someday? Yes. Is it their most immediate need?

No.

We have 30 million unemployed or underemployed people for about 4 million existing jobs, and all indications are that the number of the unemployed (as well as the number of discouraged job-seekers) is going to increase for at least the next several months. They need jobs NOW. Our investments in R&D have been decreasing over the years, and this proposed legislation might increase it, but those jobs are years away. It is not going to pay for heat, food, homes, medical care, etc for kids this winter.

We set aside $15 trillion to support investment banks, and to pay off wealthy risk-takers in and outside this country, of which perhaps $3.5 trillion or so will not be paid back, staying in the pockets of the 6 large banks. During that same period there was an $800 Billion stimulus program directed at saving and creating jobs.

Doesn't Main Street deserves the same consideration as investors in Germany and France? Perhaps another $2 trillion invested in some immediate employment for our neighbors, some creation of small manufacturing businesses owned by the employees, some public economic education to help people spend money that will stay in this country. The FASB put in place rules that allow banks to use mark-to-myth accounting so they don't have to value assets at their market value, to keep them afloat. Maybe some consideration for existing homeowners could ease things for them as well?

--------------------

Btw - The CREATION of NEW jobs may come mostly from startups, whether they be large or small, according to a study by John C. Haltiwanger, a University of Maryland economist, published by the National Bureau of Economic Research. This supports the need for the above legislation. But I wish they would concentrate on today's needs today.

If you don't have an account to get this paper from the NBER the study is available here....

Who Creates Jobs? Small vs. Large vs. Young
John C. Haltiwanger, Ron S. Jarmin, Javier Miranda
NBER Working Paper No. 16300
Issued in August 2010

Abstract: There’s been a long, sometimes heated, debate on the role of firm size in employment
growth. Despite skepticism in the academic community, the notion that growth is negatively
related to firm size remains appealing to policymakers and small business advocates. Basically,
they argue that small firms grow faster than larger firms and are more important as a source of
job creation. In this paper, we provide a more nuanced perspective on this debate. Using data
from the Census Bureau Business Dynamics Statistics and Longitudinal Business Database, we
explore the many issues regarding the role of firm size and growth that have been at the core of
this ongoing debate (such as the role of regression to the mean). We find that the relationship
between firm size and employment growth is sensitive to these issues. However, our main
finding is that once we control for firm age there is no systematic relationship between firm size
and growth. Indeed, once we control for firm age, we find that firms with between 5 and 499
employees have lower net growth rates than the largest firms (10,000 or more workers) in the
economy. Our findings highlight the important role of business startups and young businesses in
U.S. job creation. Business startups contribute substantially to both gross and net job creation.
In addition, we find an “up or out” dynamic of young (and small businesses). These findings
imply that it is critical to control for and understand the role of firm age in explaining U.S. job
creation.

[bergie321]

43. Haven't the past 30 years

Proven that this won't work? Increase taxes on companies that horde cash and offshore jobs.

[Jim_Shorts]

44. LEMMEE SSEEE

I get 2 brand new machines ,courtesy of the US government (more assets for me = good)

Now since the new machines are twice as fast i can fire 2 people, but who gets those savings - OH I DO

THATS THE TICKET

[texpatriot2004]

45. Excellent idea. nt

[Rochester]

46. It won't help

At best, they will hoard the money or use it to pay themselves more obscene bonuses.
At worst, they will buy out a competitor or two, precipitating more layoffs.
If they do use it to hire people, those people will be foreigners, so that businesses can pull off the usual trifecta. They will pay the foreign workers as little as they can, viewing them as expendable commodities to be used up and thrown away like garbage. They will rape the environment overseas, knowing that the rulers of those lands won't mind a little pollution knowing that it will bring them a chance to plunder money and power from America, which they perceive as a fat complacent cud-chewing cow ready to slaughter. They will then try to reap as much profit as they can selling their crap to Americans who still have jobs, who they view similarly to how the foreign countries view us as a whole.
In short, they will use the money to do almost anything in the world other than hire Americans, and society as a whole will be poorer for loss of the public funds.
Trying to entice the businesses to do what they are trying not to do won't work.
Don't entice. Coerce.

[jeanpalmer]

47. Exactly

The goal of every business is to eliminate as many jobs as possible, and substitute machines and cheap foreign workers. The economy has huge excess industrial capacity right now, so corporations will not invest in new capacity. If they increase R&D, they will game the system to take the tax break for R&D they already had planned. Or R&D that helps them find ways to eliminate jobs. And they will pocket every dollar they can. Obama is just going to increase their bottom line.

It seems crazy to hand out corporate tax breaks while agonizing over the defict and considering SS benefit cuts. If he's going to hand out money, it would be better to give the tax cut money to SS recipients who would spend all of it and in the process increase final demand and spur job growth.

[WCGreen]

48. The main tax benefit here for business is to accelerate the

tax write off of research and development through 2011. As the tax code stands now, R&D costs have to be amortized and spread out over the life of the project. This way, business decision makers will ramp up the process so that they can write off R&D expenses in tax year 2011 instead of having to spread the costs over say five years.

This is a good, sane approach to business tax policy. You invest in R&D and you will get an accelerated tax write off. You don't invest, you get nothing...

[opihimoimoi]

49. plus 1 :o)

http://www.youtube.com/watch?v=lRpKmd3vjbk

1812

[earcandle]

51. wait, I thought he was opposing tax cuts for the wealthy. is he talking business that make under

$250K in profit? Or does that just apply to individuals? 

[obxhead]

53. hmmm I think Obama needs to read this thread:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x9142713