President Obama Proposing $300 BILLION Tax Cuts To Businesses

[Techn0Girl]

You heard that right 300 Billion dollars.

http://money.cnn.com/2010/09/07/news/economy/obama_business_tax_cut/index.htm

"WASHINGTON (CNN) -- In another move aimed at stabilizing the still-shaky economy, President Obama on Wednesday will introduce a new $200 billion tax cut giving businesses across the country an incentive to buy new equipment in the short term, according to a senior administration official."
...
"The new tax cut will be in addition to a $100 billion permanent extension of the business tax credit for research and development,"

300 Billion to businesses to invest in capital and equipment. The theory is that the money will "trickle down" and create new jobs. Does that sound at all familiar?

Now here's the thing. If people are out of work, if they are losing their homes, of they can't afford their health insurance then they sure as hell not buying anything that isn't necessary.

And if people aren't putting out for their new cars, new houses, new plasma TVs , double half-caff lattes or whatever then business sure as hell does not need any new employees. So they aren't going to be hiring but they get the tax credit nonetheless.

Let me put into perspective what 300 Billion dollars can do for the middle class; for each and every one of you reading this now.

Let's say we believe the government 9.6 unemployment rate and say there are 15 million unemployed in this country right now - oh hell let's DOUBLE that to 30 million. Now here's what 300 billion dollars will buy for each and every one of those 30 million people. It would give ten thousand dollars to each and every one of those people.

Unemployed? Think about how your life could change if you had ten thousand dollars right this minute. You could buy:

1. Two years of retraining at a local community college. You could retrain to be something that is in more demand right now, maybe an LVN or an EMT.

2. An entire years worth of health insurance for most American families

3. Close to a years worth of mortgage payments so you won't be thrown out on the streets.

4. Half a year of extended unemployment benefits for every single unemployed American.

But you won't be getting any of that because you aren't too big to fail.
Businesses will get all that. The very same businesses who laid you off in the first place.

How do you feel about that?

[Karmadillo]

1. He's only been in office less than two years?

nt

[Rosa Luxemburg]

5. what does that mean?

[Catherina]

40. It means that we're too lowly to understand the super arcane 3D Chess n/t

[galileoreloaded]

66. Agreed. it's only been two years and he is just starting to find his sea legs.....n/t

[lib2DaBone]

72. Tax cuts do not create jobs.. More .supply side nonsense....

If only we had some leadership that could grasp Demand economics.

Kill NAFTA.. bring our jobs home.. bring our troops home.. start to rebuild America... Simple.

[depakid]

2. Now there's some red meat for the base

the Republican base.

On the other hand, he's got to "do something" that might have a stimulatory effect, even if the bang for the buck is "questionable."

[Techn0Girl]

7. He could create a jobs retraining program....

giving every single unemployed American $10,000 in retraining funds.

Or he could create a government jobs program for every single American and put them to work in government healthcare or government construction projects.

He could do those things but instead he is going to give it all to business and let it "trickle down" to you and me.

[TBF]

3. Clearly it's high level chess that I don't understand. nt

[theHandpuppet]

45. Even Spock wouldn't understand these kinds of chess moves

Either that, or we're just resistant to accepting the truth because it's hard to admit we've been had.

[Rosa Luxemburg]

4. the only way to create jobs, is increase services and manufacturing

and Obama is doing the right thing by giving businesses a break.

This will win us the election!

[Techn0Girl]

8. It doesn't matter how much you produce....

If people can't afford to buy your product then it doesn't make sense to hire more people to increase production does it?

I, like many others , can no longer afford my daily three dollar Starbucks latte. Starbucks isn't opening more stores - in fact last year they closed a bunch of them.

[Rosa Luxemburg]

10. well they can if they have a job!

it's like a cycle

[depakid]

13. Yes it is- but the jobs start with increased DEMAND not supply or capacity

[Rosa Luxemburg]

15. the government creates demand.

[Techn0Girl]

25. How can the government create "demand" for my Mocho-coco-Latte or my new x-Box....

If I'm unemployed and can't afford either?

I'm curious what you are thinking here.

[depakid]

26. Not via these sorts of tax cuts

See: http://en.wikipedia.org/wiki/Supply-side_economics">Supply Side economics -a subset of Reaganomics

[True_Blue]

53. I Agree

Businesses aren't going to make products for which there is no demand.

[babylonsister]

6. Kind of back-fired on you, didn't it. This is a good thing. nt

[SidDithers]

22. Yes, it is a good thing...nt

Sid

[JuniperLea]

23. Works for me!

This is a very good thing:)

[inna]

30. huh?

what are you babbling about?

[Name removed]

9. Deleted message

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

[IndianaJoe]

11. It doesn't bother me. Sounds like an OK idea.

The idea is to put people back to work. If businesses are given incentives to hire, that good. Then maybe we can buy things.

Ploughing some money into infrastructure repairs wouldn't be a bad idea either.

[Techn0Girl]

12. But that's the thing - they are NOT being given an incentive to hire....

They are getting tax breaks on equipment (read the article)
There is no incentive to hire.

[IndianaJoe]

16. Of course, it's all academic anyway, because the Republicans

would filibuster Christmas if Obama proposed it. But doesn't giving business more money to spend mean more money to invest, to buy plant and equipment, to produce things? How does that not lead ultimately to more jobs? I guess I don't follow you. Are you saying that if given more money businesses won't use it?

[Techn0Girl]

20. They use it all right ... just not in any way that creates American Jobs....

See my ling a few posts down in the post ""Tax Cuts for the rich create jobs outside the US""

[TBF]

24. Tax cuts for the rich also result in the rich having more money.

Trickle down doesn't work - nobody benefits but the rich. It didn't work when Reagan did it, and it won't work for Obama.

[IndianaJoe]

27. Well, not all businesses are "rich"

One of the things Ed Schultz moans about every day is the fact that banks aren't lending businesses any money and without credit the economy can't move and no one gets hired. What Obama is proposing, in a sense, lets a business self-finance.

[Nay]

50. We are saying that there has to be a demand for the things BEFORE

businesses will hire anyone to produce the things. Obama has it backwards. Businesses all over the country are sitting on piles of cash right now, waiting to see if demand increases. Give them the money, and they will have a bigger pile of money to sit on.

There are things that desperately need to be done in this country, and due to the total corruption of lots of contractors, the govt really ought to hire people outright and put them to work fixing schools, paving roads, upgrading power plants, laying down new RR track, insulating houses...the list goes on. That's the stuff that needs to be done -- not trying to get businesses to sell us one more useless product.

[Techn0Girl]

58. You're spot on...we need more schools .. more hospitals ...better roads....

all that and more as you say.

But that would benefit the middle class primarily.
The wealthy have all those things already.

[SlimJimmy]

44. And this is NOT a tax cut, it is a tax credit on equipment. The

last time I checked, tax credits weren't accepted at the bank, the store, or any other creditor. In order for this to work, the business has to outlay the cash first, then recoup the money at tax time. It's really not much of an incentive at all.

[Techn0Girl]

46. Really ... Do you know that businesses end up ....

purchasing equipment and factories in China and other overseas locales to maximize their profit.
Do you know that this tax credit/cut doesn't prohibit that?

Big business just end up using the credit to replace their already existing aging equipment that they would have had to purchase anyway - but now - it's MUCH cheaper.

And nothing - NOTHING - trickles down to the middle class.
I learned that back in the 80's with Ronnie that was 30 years ago.

Different Politicians - same old screw job.

[SlimJimmy]

61. In THIS economic environment, nobody purchases anything from anyone. There is no incentive to do

so. I learned that in the 70's under President Carter. I've already expressed my view of his presidency, so no need to go there again. And, for the record, this credit (not tax cut) is supposed to be targeted to SMALL business. Oh to have President Clinton back. What I would give.

[Techn0Girl]

63. Whether you call it a "credit" or a "tax cut" it is STILL 300 Nillion going to business and not you

And regarding your assertion that this is a "small business" tax cut...

"Keith Olberman Exposes Republican 'Small Business' Scam"
http://willblogforfood.typepad.com/will_blog_for_food/2010/09/keith-olberman-exposes-republican-small-business-scam.html

"For example, the Bechtel Corporation, the largest construction company in the world with 2009 revenues of $30.8 billion is classified as a 'small business' for tax purposes. Price Waterhouse Coopers, an accounting firm with $26 billion in revenue in 2009, is classified as a 'small business."

You are being lied to.
Wake up.

[SlimJimmy]

67. You really don't have a clue about this at all.

This is not a plan that will work. Try reading a bit more before you jump in next time.

[Techn0Girl]

69. Well your argument of "This is not a plan that will work. Try reading a bit more "...

has utterly convinced me that you are absolutely correct.
I strongly encourage you to try out for your grade school debate team as you seem to be a natural.

[SlimJimmy]

75. WHen you get a clue, we'll discuss it more. (nt)

[alittlelark]

49. WHO will run the new equipment?

Who will install it?
Who will buy the product facilitated by the new equipment?


Are you listening to yourself?

[Techn0Girl]

57. I often wondwr how politicians can get away with lies like "trickle-down"....

Thank you for helping me have clarity on that issue.

[alittlelark]

14. In a country w/o a strong mfg base it makes perfect sense.

We have a very weak mfg base.

I hope that these $$$ will be earmarked more towards the smaller businesses.

PS- your 1-4 arguments make no sense. They are microeconomics - these $$$ are macro.

[Techn0Girl]

17. "Tax Cuts for the rich create jobs outside the US"

http://crooksandliars.com/ian-welsh/tax-cuts-rich-create-jobs-outside-us

"Our own examination of US non-residential investment indicates that the reduction in capital gains tax rates failed to spur US business investment and failed to improve US economic competitiveness."

[SidDithers]

21. And what does a capital-gains tax cut...

have to do with accelerated depreciation on additions of capital equipment?

Just because they both say "capital" doesn't mean they're the same thing.

Sid

[SidDithers]

18. +1...nt

Sid

[Autumn]

19. That makes a lot of sense, but you

know that as far as our politicians are concerned, we are not worth it, hell we want too much as it is. It sure does remind me of Saint Ronnie and his trickle down.

[Techn0Girl]

28. Not all politicians think that way....

you have Bernie Sanders, Al Franken, Alan Grayson, Barnie Frank to nae a few - but I have to agree with you that WAY too few seem to have our interests at heart as opposed to the interests of Big Business.

I think this 300 Billion boondoggle pretty much proves that.
No more trickle down economics!

[inna]

29. insult to injury. offensive as hell, there is no excuse for this.

[Karmadillo]

62. That would make an appropriate slogan for the administration's 2012 reelection bid.

nt

[TexasObserver]

31. Sounds great. Good plan.

$300 billion should go to infra structure projects and $300 billion should go to jobs projects, too.

[Techn0Girl]

33. I totally agree with you that the money should go into jobs or infrastructure projects...

Completely and wholeheartedly agree.

Unfortunately that's not where the money is going. The 300 billion is going into tax breaks for capital.

Not for jobs. Not for infrastructure.
Nothing to create jobs.
Read the link in the OP and see for yourself.

[TexasObserver]

34. $300 bil for tax breaks, $300 bil for jobs, $300 bil for infrastructure.

Is what I'm proposing. I've long been an advocate of spending another trillion on Stimulus, and I've said it needs to be equal portions of each of those three.

Because the business sector owns so many votes in congress, they'll get the tax breaks. That's always a given. Might as well accept that and see what can be linked to its passage.

As for job creation, I disagree with your conclusion. Tax breaks help create jobs - at least they can. When after tax profits rise, money available for job formation is created.

[Techn0Girl]

36. Well with that kind of an agenda ....

I wish you'd run next November because I'd totally vote for you in a heartbeat.

Unfortunately that's not what our current administration is proposing. :-(

I must disagree with your assertion that tax breaks create jobs - that hasn't proven to be the case. Tax breaks on capital equipment only create jobs overseas. See:

http://crooksandliars.com/ian-welsh/tax-cuts-rich-create-jobs-outside-us

And if you think that payroll tax breaks create jobs then you should have a conversation with my housemate Charles. He lost his job last year as an I.T. admin because of a payroll tax break. The company forced him out so that they could hire a different person who made them eligible for the tax break. Charles works as a clerk in a quickie mart kind of store now.

[TexasObserver]

37. I believe tax breaks should be tied to US workers benefiting.

No breaks for sending manufacturing or headquarters outside the USA.

No breaks for hiring foreign workers of any kind.

No breaks for buying equipment not manufactured in the USA.

Buy an American tractor, get a tax break. Buy one from Japan, no break.

That would be my approach. I do not want to see tax breaks for those who use them to undermine USA industry and workers.

[Techn0Girl]

38. Looks like we're on the same team after all :)

(and, yeah, I saw your snarky comment before you edited it out) LOL

It's just unfortunate that this administration - that I cheerled for - doesn't believe what you (or I ) do with regard to those tax breaks.

[TexasObserver]

39. I am a protectionist. Always have been.

We're the only nation in the world that isn't. The fiction of the free market is just that. Try selling steel in Korea. Try selling beef in Japan. They've screwed our business interests in those areas for decades.

I think the administration's problem is the president doesn't understand economic issues very well, and he's picked economic advisers who aren't true to Democratic ideals. He needs fewer damn Republicans in his group of economic advisers.

[MadHound]

32. More tinkle on economics.

Tax cuts are the least effective method of stimulating the economy, bar none. Creating a WPA style jobs program is one of the most effective forms of stimulating the economy. They know that, so why do they continue this stupidity of more and more tax cuts. All it does is keep the economy weak, drains the middle class and add to the wealth of the elite.

Mmm, change:eyes:

[Catherina]

42. The change is what we'll have left in our pockets when they're done n/t

[notesdev]

35. Won't be just any businesses either

It's going to go primarily to the biggest companies and the ones sending jobs offshore.

Didn't the complete failure of ARRA and its $1 trillion in waste get the message through that pulling forward demand through borrowing causes price hikes and collapses future demand?

If there's going to be a tax cut, the absolute best thing that can be done for the economy is to cut taxes on fuel, the price of which is reflected to one degree or another in the price of everything else, and it's one of the most truly progressive tax moves that can be made.

[Ozymanithrax]

41. At some point, we will need to reindustrialize the U.S...

Perhaps it is time for a second industrial revolution.

[paulk]

43. tax credit for R & D is ok

but the $200 billion for write offs is just more of the same supply side bullshit that Republicans love.

[ProgressiveEconomist]

47. The true ultimate cost of the President's proposal is $30 billion, not $200 billion,

and where did the "$300 billion to businesses to invest in capital and equipment" in the OP come from?

Business investment in capital and equipment is tax deductible in any case. The alternative to immediately "expensing" small business investments in equipment as the President proposed is "depreciation" over several years. Small businesses would only get to "expense" their investments for a limited period of time.

Thus small businesses would be incentivized to spend on capital equipment (such as Caterpillar bulldozers) NOW rather than in the future. The makers of the capital equipment would have to hire more workers to meet the new demand. And the "expensed" tax deductions for that equipment would have been taken as "depreciation" in future years anyway--except that the equipment would not have been bought now without the proposed legislation.

See http://economix.blogs.nytimes.com/2010/09/07/reactions-to-obamas-business-tax-write-off-proposals/?pagemode=print for other reactions to this proposal.

[Techn0Girl]

51. The O.P. says quite clearly 300 billion (200 + 100)

[ProgressiveEconomist]

52. True, that's in the CNN quote. But the OP also says exactly what I put in quotes in post #47.

[Techn0Girl]

54. I've seen you on other threads - you just make thing up just like you are making this up.

Anyone can check the OP and the link and see for themselves .
What you say is completely untrue.
Thanks for kicking my post up though.

[ProgressiveEconomist]

56. So the OP does not say "300 billion to businesses to invest in capital and equipment"?

Right after the CNN quote at the top?

I get no "OOPS--thank you for pointing out my mistake"?

In addition, doesn't the substance of my post #47 expose the thrust of most of your OP as economic disinformation, though perhaps unintentional?

"Most people who don't know, don't know they don't know", as Steve Allen so often said.

[Techn0Girl]

59. I'm going to have to put you on ignore....

I don't waste time speaking to people who spout nonsense on the streets and I won't here either.

[ProgressiveEconomist]

60. I sure hope you're telling the truth this time!

[Coyote_Bandit]

48. I enrolled in a program at the local tech school

Largest tech school in the state actually. After investing about $7,000 in tuition, books and materials (and excluding foregone earnings and transportation costs) the fucking school closed the program. Those of us who were enrolled didn't get any money back for our time, effort and trouble. Nor were we given the opportunity to actually complete the program. The nearest comparable program is about 400 miles away - and they won't accept transfer credits. Students are required to complete their program in its entirety.

There's something wrong with thais picture. But good luck finding an attorney willing to take the case. Not enough damages or potential for recovery to invest their time and effort. The school position is that tuition was paid for each individual course - and not for the opportunity to complete a training program. So I got fucked.

Education is a scam. Not always - but far too often. We value credentials more than skills.

[Techn0Girl]

55. That is so very unfortunate....

We live in a society where only the wealthy can afford justice.

We need to elect politicians that will change that.

[JNelson6563]

64. Those tax breaks are for buying equipment, hiring people

and the like.

If you're talking about the bill I thinking you're talking about there are incentives to lenders to lend to small businesses and tax breaks for businesses to invest in the things I mentioned.

As one who is working on opening a business I am thrilled with this bill. It raises the ceiling for a "micro-loan" to $50,000. That is how much I will be borrowing to start the business. I will be able to write off all the equipment and fixtures I will have to buy. This is such a great help for what I am trying to do and I believe my endeavor and others like me are what this legislation is targeting.

But hey, don't let me rain on your Dem-hating parade. Please resume your knee-jerk reactionary hysterics....

Julie

[maryf]

65. Tax breaks are used to increase profit rates...

and the workers very rarely benefit via jobs, more likely job cuts to ward off less profit loss. Dems need to turn left again to their traditional values and support labor, not business...this sounds more something in the traditional Republican vein to me...not something that a traditional Dem would support...

[JNelson6563]

70. The facts about the recent bill

Congress Sends Small Business Lending Bill to President
Posted on: Fri, 24 Sep 2010 11:29:02 EDT

Sep 24, 2010 (Congressional Documents and Publications/ContentWorks via COMTEX) --

WASHINGTON - To tackle one of the most important issues facing small businesses, our nation's job creators, Congress gave final passage to Congresswoman Melissa Bean's Small Business Lending Fund Act (H.R. 5297), sending the bill to President Obama for his signature. The legislation will incentivize increased small business lending by community banks, provides $12 billion in tax breaks for small businesses, and contains two additional Bean bills which will provide small businesses access to credit on affordable terms. The House approved the 237-187.

Bean helped introduce the measure in the House in May and helped lead debate in favor of the measure when it first passed the House in June.

"This is one of the most important measures we have passed this year, in terms of supporting economic recovery," Bean said. "During my Small Business Federal Resource Seminars, community business owners have told me that lack of access to affordable credit remains the biggest obstacle to business recovery, expansion and diversification. This legislation will help bridge that gap and is critical and timely to sustaining our economic recovery and creating jobs."

The bill creates a $30 billion Small Business Lending Fund to provide community banks with capital to increase small business lending by up to $300 billion in new loans. The fund is limited to the smallest banks, those holding $10 billion or less in assets, with key performance-based standards to incentivize those lenders that extend new credit to small businesses (decreasing the dividend rate banks pay as they increase small business lending). Banks must repay all capital investments with interest to the government within ten years, and the non-partisan Congressional Budget Office estimates that the lending fund will profit taxpayers $1.1 billion, which will be used toward deficit reduction.

More info at link: http://www.tradingmarkets.com/news/stock-alert/sbcod_congress-sends-small-business-lending-bill-to-president-1189812.html

[BzaDem]

68. The 200 billion of accellerated depreciation does NOT cost 200 billion. It actually costs 30 billion

Businesses ALREADY deduct the expenses. They just currently do it over a long period of time.

All the "200 billion" proposal does is allow businesses to deduct some stuff in one year, rather than over many years. It is essentially a no-interest loan to businesses, not a tax credit. It only costs the government 30 billion.

To make an analogy, say instead of being able to deduct your mortgage interest today, you had to wait 15 years to deduct it. And then the government passed a bill allowing you to deduct it all TODAY, instead of 15 years later. That's all this is. It is giving you the deduction earlier (essentially a no interest loan).

So the total cost of his proposals are 130 billion (100 + 30), NOT 300 billion (100 + 200).

[ProgressiveEconomist]

71. Don't you just hate disinformation? For a LINK on this, see post #47 above

[Initech]

73. I'm so sick of this business = people logic I could puke.

And I'm not defending big business in any way, shape or form, I might add.

[inna]

74. For those who missed Robert Reich on this:

http://robertreich.org/post/1079916360


The economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox.

...

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.

...

[sendero]

76. Thanks Obama..

... for making my repeated assertions that you are clueless about economics become clear to all but the most ignorant.