Helping the economy-Obama’s plans for highway spending and tax deductions would create jobs

[babylonsister]

Helping the economy
Obama’s plans for highway spending and tax deductions would create jobs

Wednesday, Sept. 8, 2010 | 2:01 a.m.


In a Labor Day address before union workers in Milwaukee, President Barack Obama acknowledged what Republicans in Congress have been too afraid to admit — that the shattered economy he inherited when he took office could not be mended quickly. Obama stepped into the Oval Office facing catastrophic marketplace failures in housing and finance.

Thanks to his predecessors in the Bush administration, greedy Wall Street companies ran amok in an unregulated environment. Meanwhile, nothing was being done to protect America’s working class.

Years of reckless mismanagement in Washington cannot be changed overnight, which helps explain why it has been so difficult to turn the economy around. The carnage, as Obama stated, is reflected in the fact that nearly 1 in 5 construction workers is unemployed.

“It doesn’t do anybody any good when so many hardworking Americans have been idled for months, even years, at a time when there is so much of America that needs rebuilding,” he said.

With that in mind, the president proposed that Congress approve $50 billion in new spending to shore up the nation’s roads, railways and airport runways. He also made a pitch for an infrastructure bank that would help finance projects based on economic need rather than on geography or politics, which is the way many transportation funds are allocated now.

But the president is not stopping there. Fully aware that more should be done to stimulate the economy, Obama is also proposing that businesses be allowed to take tax deductions on the full value of new equipment purchases through next year. As reported by The New York Times, those deductions would give companies more incentive to spend and invest.

One thing the infrastructure financing and tax deduction plans have in common — and why they should be approved — is that both would create jobs, the key to a sustainable economic recovery.

more...

http://www.lasvegassun.com/news/2010/sep/08/helping-economy/

[paulk]

1. it's debatable whether or not the tax breaks would create jobs

some think they may even have the opposite effect:

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

The tax breaks are more of the same supply side nonsense that got us into this mess, and I can only hope Obama is including them as a sop for the Republicans as a way to gain support for his $50 billion infrastructure plan - and not that he actually believes in this stuff...

[phleshdef]

2. Tax incentives targeted directly at job creation does in fact create jobs.

Trickle down tax cuts do not do anything other than result in ultra wealthy corporations paying less taxes. But giving ANY company a tax incentive that is rewarded as a result of a company hiring a new person is a totally different thing. If they don't hire a new person, they don't get the incentive. I'm not certain this proposal is going to work that way, but I'm just making the point that tax breaks are not automatically bad. There are a billion different ways to approach them and some of those ways are good.

[paulk]

3. the new proposals are not targeted at creating jobs

they allow companies to fully deduct the cost of new equipment purchases in one year rather than over 10 years, which is the way it's done now.

If they tied this plan to some kind of hiring incentive, it would make sense - otherwise, I don't see this as anything more than a gift to industry.

I keep hoping Obama isn't so clueless, that there is some reason behind his support of supply side ideology -

seriously - read the Reich article - I would welcome some opinions on why these tax breaks are a good idea and how they help create jobs.

[phleshdef]

4. Still, if a business is buying equipment, the chances that its expanding are somewhat high.

Of course some big business factories could be buying industrial robots to replace employees. But would not be the story for all cases. A lot of businesses, especially small businesses, are purchasing new equipment to be operated by new employees. Computers, desks, cash registers, building and road construction machinery (that one is especially significant in this case), company vehicles, the list could go on and on.

Also, if this were to get passed and coincide with the taxes for the wealthiest going back to the 90s levels, it all kind of starts to balance out, what you have is businesses themselves having more money instead of its CEOs or wall street investors actually being the ones pocketing all of it. If huge chunks of that profit makes its way into the pockets of a few individuals, then more of it has to go right back to the coffers of the federal government.

I've read the Reich article and I like the idea of having the income tax holiday for the first X amount of dollars everyone makes. It doesn't appear they are going to go with that idea. But I don't think this equipment purchase tax break is just a "gift to industry". As long as we raise the individual income tax level for wealthier individuals, I don't see where there is a problem. Tax incentives that reward any positive economic activity are progressive in my opinion.

[paulk]

5. the money gained through the expiration of the tax breaks for

the richest Americans could be a hell of a lot better spent than being "balanced out" by this legislation.

Reich thinks this is just a political ploy - a way to make the Republicans look bad... he's probably right - but people don't care about the finer points of Washington's tit for tat - they want jobs and supply side economics, which this is, has already been shown not to create jobs. And he makes a damn good case that this tax break will not create jobs.

My main worry about the Obama admin. vis a vis the economy, is that they just. don't. get. it. This isn't any ordinary downturn in the economy that's going to be fixed by DC politicking and dancing around the edges (like the recent financial reform bill). We need systemic reform, and this bill is not an encouraging sign that the Obama team is even thinking along those lines.

[Hawkowl]

6. Not in this economy

Companies may very well use the tax incentives to upgrade equipment and squeeze even more productivity out of workers. In a non expansion environment, such as we are now in, productivity increases go right toward reducing man hours.

I very much agree with you on increasing the income tax levels. I would advocate going all the way back to pre-Reagan tax rates though! Freedom isn't free, and there is no reason we can't go back to war time tax rates of Nixon on those making over $250K!

In addition, capital gains rates should be even higher than "normal" income tax rates. We could still exclude homes from that (if people are still lucky enough to make a profit)!

There is a direct correlation between low tax rates on the wealthy and economic disaster for everyone else.

[Cha]

7. Yes, they would create jobs but some can't stand that..

bc it would mean success for our country and the President and they'd rather the country go down than give any credit to Obama.