Obama Gets Write-Offs Right
A Commentary by Lawrence Kudlow
It’s all midterm-election politics, but Obama’s last-minute idea for 100 percent tax write-offs for corporate investment is, in fact, a good idea.
He proposes a two-year window to incentivize businesses to bring forward their investments. From the standpoint of investment, it’s the right way to go. Perhaps Larry Summers now thinks tax cuts are the right way to go, too.
CEOs like Fred Smith of FedEx have argued for full cash expensing for many years, along with a big drop in the corporate tax rate itself. This is what Team Obama should have done in the first place: Slash business tax rates and accelerate investment-depreciation schedules.
Years ago, Gary and Aldona Robbins did work showing that accelerated investment depreciation gives the biggest bang for the buck -- roughly $10 of new GDP for each dollar of faster tax write-offs for investment. Those write-offs, a lower capital-gains tax rate, and a cut in the corporate tax have been powerful economic stimulants in the past.
Perhaps a Republican Congress in 2011 will go back to these business tax-cutting approaches. When businesses invest, they create new jobs. (Of course, any of these business tax provisions should be universalized for large, medium, and small companies.)
Meanwhile, Obama’s other proposal for $50 billion in infrastructure spending is a laughing stock. More failed spending stimulus. Think of it. I guess Team Obama had to put this in to please their union supporters who will get the Davis-Bacon wage rate rather than a true market rate.
And Obama’s infrastructure-bank idea is going nowhere. It’s like Fannie Mae for road building. But we already have Fannie and Freddie, and they’re broke. And the taxpayers own them. It’s a big political boondoggle.
So I guess Team Obama really is addicted to these big-government, big-spending, economic-planning ideas. They need a 12-step program to get off them. And that’s coming. It’s called the midterm elections.
COPYRIGHT 2010 CREATORS SYNDICATE INC.
See More Commentary by Lawrence Kudlow
See Other Political Commentary
Views expressed in this column are those of the author, not those of Rasmussen Reports.
Rasmussen Reports is a media company specializing in the collection, publication and distribution of public opinion information.
We conduct public opinion polls on a variety of topics to inform our audience on events in the news and other topics of interest. To ensure editorial control and independence, we pay for the polls ourselves and generate revenue through the sale of subscriptions, sponsorships, and advertising. Nightly polling on politics, business and lifestyle topics provides the content to update the Rasmussen Reports web site many times each day. If it's in the news, it's in our polls. Additionally, the data drives a daily update newsletter and various media outlets across the country.
Some information, including the Rasmussen Reports daily Presidential Tracking Poll and commentaries are available for free to the general public. Subscriptions are available for $4.95 a month or 34.95 a year that provide subscribers with exclusive access to more than 20 stories per week on upcoming elections, consumer confidence, and issues that affect us all. For those who are really into the numbers, Platinum Members can review demographic crosstabs and a full history of our data.
To learn more about our methodology, click here.