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Obama to introduce another business tax cut

RightinNYC said:
To clarify, Obama has proposed three different things:

1) $50b for infrastructure
2) $100b to make the R&D tax credit permanent
3) $200b to allow companies to deduct the full cost of capital investment in 2011
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thank you. and all are good ideas.
 
liblady said:
you don't debate. see ya.
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Sure I do.
But here. there's nothing -to- debate.
The Obama is proposing a tax break to help businesses - good for him; glad to see he gets it.

The point, however, is that if this was proposed by a Republican, the liberal left - people like you - would be asking about how it would be paid for and complaining about how it is nothing but another hand-out to the rich and how trickle-down is a proven failure.

Its amazing how the standards of the left change when there's a (D) next to someone's name.
 
RightinNYC said:
To clarify, Obama has proposed three different things:

1) $50b for infrastructure
2) $100b to make the R&D tax credit permanent
3) $200b to allow companies to deduct the full cost of capital investment in 2011
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If i'm not mistaken, (3) is 100 billion, not 200.

It's also amusing.

As if the problem with the economy right now is that companies can't afford the cost of capital. How is this supposed to create jobs? If anything it will do the opposite as companies invest in automation, etc.

MaggieD said:
If Republicans oppose this, I really will believe they are The Party of No.
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Exactly what Obama wants.

This is a great example of good politics taking precedence over good policy.
 
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liblady said:
thank you. and all are good ideas.
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From your perspective, what exactly makes them good ideas? Most of these ideas existed in one form or another during Republican administrations as well, but I doubt they received as much support from Democrats then as they will now.
 
Taylor said:
If i'm not mistaken, (3) is 100 billion, not 200.
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I think it's $200, though neither number really reflects the actual cost.

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

It would cost an estimated $200 billion in revenues, though the ultimate net loss would be $30 billion over 10 years, administration officials say, since businesses would eventually deduct the depreciated value of the equipment in any case.
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...

This is a great example of good politics taking precedence over good policy.
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I'm not sure whether it's good policy or not, but either way I agree that there are political considerations driving this.
 
RightinNYC said:
I think it's $200, though neither number really reflects the actual cost.
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Hmm I think that IS right - the few sources I looked at earlier (financial blogs) had bad info that collapsed (2) and (3) into under a single 200 billion. News sites are reporting it the way you had it.

Still, there's lots of confusion. USA today says the capital investment proposal will provide "estimated savings over two years: $200 billion" rather than $200 billion reduction in tax revenue.
http://content.usatoday.com/communi...obama-to-pitch-new-set-of-business-tax-cuts/1
 
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Jetboogieman said:
I'm not a democrat. He told you what he's gonna do. Who's lying?



You're opposing this for the sake of it. Do you actually UNDERSTAND what it means.

"proposed expansion of the research and experimentation tax credit to $50 billion"

The Credit comes in if a company invests in R&D...

Basically what he's saying is, if you buy new equipment, we won't tax you on it... which is a tax cut.
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You're a liberal though, and you'll vote Dem this fall.
 
American said:
You're a liberal though, and you'll vote Dem this fall.
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No he wont vote democrat this fall

It would be very illegal for him to do so.

You he is not American, does not live in America, and to my knowledge does not plan on moving to the US and becoming a US citizen in time to vote democrat this fall
 
Jetboogieman said:
It would be highly interesting if the Republicans opposed this plan.
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Businesse can already write off 100% of equipment purchases. How is this some new, life saving idea from The Messiah?
 
apdst said:
Businesse can already write off 100% of equipment purchases. How is this some new, life saving idea from The Messiah?
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That's news to me. You may be confusing a tax deduction with a tax credit. (waaaay big difference....)


.
 
RightinNYC said:
I think it's $200, though neither number really reflects the actual cost.

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


I'm not sure whether it's good policy or not, but either way I agree that there are political considerations driving this.
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Seems like a very bizarre proposal. As you note, may be good, may be not so good.

They way i am reading, it is basically offering every company the chance to project their annual tax bill and then spend all that sum on capital investments as opposed to paying it in income tax. A special kind of Christmas.

If i have a small company with $1 million in projected revenues and $100,000 in net profit, i'm gonna replace all my pickup trucks and buy the adjoining land to my store. (or whatever adds up to $100,000) Which has some upside for the economy short term in my spending but not sure how its gonna help the big picture. Will result in that amount less coming into the tax coffers but as a "one shot" program, doesn't translate to me necessarily hiring anybody. (Am going to be focusing on liquid capital for a situation like this one)

Either way, sounds like a clever political proposal. Will be interesting how details of such a new program pan out. Seems to be in direct conflict with the Obama administration's previous positions about "spreading the wealth". Which would be a good thing.....;)



.
 
apdst said:
Businesse can already write off 100% of equipment purchases. How is this some new, life saving idea from The Messiah?
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I believe that the proposal is to allow businesses to count all of the equipment's future depreciation in this one year, rather than requiring them to follow the standard timeline for depreciation.
 
RightinNYC said:
I believe that the proposal is to allow businesses to count all of the equipment's future depreciation in this one year, rather than requiring them to follow the standard timeline for depreciation.
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There is no standard timeline for equipment depreciation. Equipment can be depriciated for a maximum of 6 years. But, equipment can be fully depreciated for 1 year.
 
apdst said:
There is no standard timeline for equipment depreciation. Equipment can be depriciated for a maximum of 6 years. But, equipment can be fully depreciated for 1 year.
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I don't think this is true. You can't just say "oh, I'm going to fully depreciate this car in one year." Many things have specified depreciation schedules:

MACRS - Wikipedia, the free encyclopedia

Under MACRS a taxpayer must compute tax deductions for depreciation of [[tangible property] using specified lives and methods. Assets are divided into classes by type of asset or by business in which the asset is used. (See tables of classes below.) Where a general class based on the nature of the asset applies (00.xx classes below), that class takes precedence over the use class.

For each class, three lives are specified: one for regular depreciation (GDS in the tables below), one for the alternative depreciation system (ADS), and a class life. Taxpayers may be required to use ADS or otherwise may elect which of the three lives to use. Lives for personal property vary from 3 years to 20 years.
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There's a table in the link.
 
Cole said:
That's news to me. You may be confusing a tax deduction with a tax credit. (waaaay big difference....)


.
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True dat! Which is what makes this even more of a joke, since not all businesses will qualify for this earth shattering, "tax cut". Which, BTW, this is far from being a tax, "cut". The Messiah is playing on the stupidtiy of his followers.
 
apdst said:
True dat! Which is what makes this even more of a joke, since not all businesses will qualify for this earth shattering, "tax cut". Which, BTW, this is far from being a tax, "cut". The Messiah is playing on the stupidtiy of his followers.
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So, describe to me why a tex credit is a bad thing while a tax cut is a good thing, assuming equal dollar amounts, and how a $50,000 tax credit will affect my business differently than a $50,000 tax cut.
 
Deuce said:
So, describe to me why a tex credit is a bad thing while a tax cut is a good thing.
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A tax, "cut", applies to all businesses. A tax credit only applies to businesses that qualify for that particular tax credit. You're smarte than me, so you should already know this.
 
RightinNYC said:
The IRS disagrees.

Publication 946 (2009), How To Depreciate Property

Again, if a piece of equipment does not lose its value for 5 years, you cannot pretend that it depreciated entirely in one year for your taxes. This proposal would temporarily allow that.
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You're not understanding what I'm telling you. You have a maximum of 6 years to depreciate property. There's no tax law that says that you can't depreciate all six years, in one years, which means that after you depreciate the piece of equipment in that one year, you have used up your entire depreciation. In short, you can fully depreciate the value in 1 year, or spread it out over 2-6 years.

let's go back to my original post on this subject.

If I buy this trailer

holden_lowboy-lrg.jpg


I can either write off this cash pucrchase the first year, or, I can write off the interest paid on the loan to buy this trailer, then depreciate the value of the trailer for 1-6 years.
 
Re: Obama to introhttp://www.debatepolitics.com/newreplyduce another business tax cut

apdst said:
You're not understanding what I'm telling you. You have a maximum of 6 years to depreciate property. There's no tax law that says that you can't depreciate all six years, in one years, which means that after you depreciate the piece of equipment in that one year, you have used up your entire depreciation. In short, you can fully depreciate the value in 1 year, or spread it out over 2-6 years.
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Gregory Mankiw, Harvard Econ professor

The Obama administration is now proposing that businesses be allowed to expense investment expenditures. That is, for purposes of calculating taxable income, businesses would be able to fully and immediately deduct the cost of equipment, rather than having to gradually deduct the cost via depreciation allowances.
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Greg Mankiw's Blog: A Small Step in the Right Direction

Wall Street Journal:

Executives said the Obama administration's proposed new tax breaks might accelerate some investment plans. But they also said the move would do little to boost demand longer-term for companies suffering from overcapacity.

The government hopes to spur business spending with a proposal to allow companies to write off 100% of new investments in plants and equipment in the first year, rather than over three to 20 years. The tax break would extend through 2011.
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Executives See Limited Benefit From Tax Break - WSJ.com

Another article from WSJ:

President Barack Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to more quickly write off 100% of their new investment in plants and equipment through 2011.

...

Companies can now deduct new investment expenses, but over a longer period of time—three to 20 years. The proposed change, which would let companies keep more cash now, is meant to give companies who may be hesitant to invest an incentive to expand, acting as a spur to the overall economy.
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Obama to Push Tax Break for Business Investment - WSJ.com

The Atlantic:

First, how will it work? The measure is actually similar to one enacted during the Bush administration. It allowed firms to immediately depreciate 50% of certain capital investments, through 2009. Obama's plan is more aggressive. It would allow 100% write-offs through 2011, retroactive to its announcement this week.

The logistics boil down to favorable accounting treatment. If a company buys some piece of equipment, usually it depreciates that equipment over some amount of time. For example, imagine if UPS depreciated its delivery trucks over five years. That allows the company to spread the vehicles' cost over that time period, while it uses them, instead of declaring it all at once. Then, the profit it makes is more evenly associated with the toll (or expense) its deliveries take on its trucks.
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Will Obama's Capital Investment Write-Off Plan Help? - Business - The Atlantic

You're telling me that rather than listen to these people, I should take the word of someone who's repeatedly had "disagreements" with the IRS over how to properly calculate taxes?
 
Re: Obama to introhttp://www.debatepolitics.com/newreplyduce another business tax cut

RightinNYC said:
Gregory Mankiw, Harvard Econ professor



Greg Mankiw's Blog: A Small Step in the Right Direction

Wall Street Journal:



Executives See Limited Benefit From Tax Break - WSJ.com

Another article from WSJ:



Obama to Push Tax Break for Business Investment - WSJ.com

The Atlantic:



Will Obama's Capital Investment Write-Off Plan Help? - Business - The Atlantic

You're telling me that rather than listen to these people, I should take the word of someone who's repeatedly had "disagreements" with the IRS over how to properly calculate taxes?
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I'm talking as someone who actually owns and operates an actual business that has never had a disagreement with the IRS about how to depreciate equipment.

Now, if you wish to continue to misinterpret the tax laws, that's your business, but I'm telling you what I know from personal experience. How many businesses have you operated? Any? If you have, please, fill us in on your personal experience.

Ultimately, what I am saying, is that giving a tax break/credit/cut to businesses for equipment purchases is a waste, since businesses have noe reason to purchase new equipment, since there is no need, because of a lack of new revenue. Whatcha' wanna bet that there's language in the law that prohibits crediting, "replacement", equipment? "New", equipment and, "replacement", equipment are two different animals.
 
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Re: Obama to introhttp://www.debatepolitics.com/newreplyduce another business tax cut

I think I'll take the Harvard economy professors word over yours apdst.
 
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