Couldn’t Help But Notice (012908)
The problem is, I’m noticing too much…..
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Kim Strassel thinks the stimulus package is a Bush economic surrender. She’s mostly right, especially in that he should have held the stimulus package hostage to making the current tax system permanent.
But IBDeditorials.com — whose conclusion is “Not to damn it with faint praise, but it could’ve been a lot worse. It also could have been a lot better.” — justifiably sees a silver lining in the expansion of immediate deductions for capital investments:
Of the plan’s total $150 billion in cost, $50 billion will go to businesses. No, it’s not a “giveaway,” as some have styled it. Businesses will take their breaks and create new products, new jobs and more wealth for all Americans. In time, they will also pay more in taxes, not less. If it’s a giveaway, it’s to all Americans — not business.
The package also lets companies immediately write off up to half of their investments in plant and capital equipment. In addition, small businesses will be able to rapidly expense equipment costs.
Two other items need to be mentioned.
The first was noted on January 18 by IBD:
As economist Allen Sinai has noted in a study for the American Council for Capital Formation, (the Bush 2003) tax cuts added 2.5% to GDP in 2004 alone. The reason is that, contrary to the Keynesian model used by the Democrats, business investment — not consumer spending — drives the economy. Thriving businesses boost incomes, add jobs and create shareholder wealth.
I lost track of the link to the second, but I recall reading about a study finding that each additional dollar of immediate expensing allowed for capital investments increased GDP by $9. I’ll take that deal any day.
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Supply-side guru Arthur Laffer’s “The Tax Threat to Prosperity” is too good to excerpt. So just read the whole thing.
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The immediate expensing of capital investments that I just referred to in the stimulus package is supposedly going to cost state governments about $4 billion. Companies will be paying less because most states use federal taxable income as the starting point for determining state income tax liability.
So of course the National Governors Association wants a $12 billion relief package for the states. You read that right.
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Last week, IBDeditorials.com usefully reminded us that Hillary Clinton’s husband locked up billions of tons of clean coal in 1996 in exchange for political contributions.
Here’s an interesting bit of non-trivia I didn’t know about that deal:
Why would ….. (President Clinton) dedicate a Utah monument while standing in Arizona? Well, this federal land grab was done without any consultation with the governor of Utah or any member of the Utah congressional delegation or any elected official in the state. The unfriendly Utah natives might have spoiled his photo-op.
The state already had six national monuments, two national recreation areas and all or part of five national forests. Three-quarters of Utah already was in federal hands. Still, the land grab was sold as a move to protect the environment.
Now, while that coal is untouchable, Mrs. Clinton is chiding George Bush for not being tough enough on the Saudis. Zheesh.
It would be tons of fun to see last-minute Executive Order by the President undoing the coal lock-up. Go ahead, Mr. Bush. Make our January 20, 2009.
