A Trillion Dollars & 19 Months Later… Obama Proposes Tax Cuts for Business
Posted by Jim Hoft on Tuesday, September 7, 2010, 6:08 AM
Gee… That only took 19 months and a trillion dollars.
Obama now wants tax cuts for business.
Hooray.
Obama is the worst jobs president since the Great Depression. The Obama-Pelosi economic plan resulted in a cumulative 7.5 million jobs deficit. By every objective measure the democrat’s Trillion dollar stimulus bomb was a complete disaster.
Barack Obama and Nancy Pelosi tripled the national deficit last year by nearly a trillion dollars – something unheard of in our nation’s history.
After an unheard of record deficit last year of $1.4 Trillion the economy is on track to experience a $1.3 Trillion deficit this year.
Instead of focusing on the economy the past two years the radicals in Washington beat up on business and rammed through an unpopular nationalized health care entitlement program.
After all of the failure Obama now wants tax cuts.
FOX News reported:
President Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to write off 100 percent of their new investment in plant and equipment through 2011, a plan that White House economists say would cut business taxes by nearly $200 billion over two years.
The proposal, to be laid out Wednesday in a speech in Cleveland, tops a raft of announcements, from a proposed expansion of the research and experimentation tax credit to $50 billion in additional spending on roads, railways and runways. But unlike those two ideas, both familiar from Obama’s 2008 campaign, the investment incentive would embrace a long-held wish by conservative economists that had never won support from either Republican or Democratic administrations.
“Temporary investment incentives like this can have big effects because they really pull investment forward,” R. Glenn Hubbard, dean of the Columbia University School of Business and a former chairman of the Council of Economic Advisers under President George W. Bush. “This could have a big stimulative effect.”
But the response Monday from business lobbyists hinted at uncertain political prospects for the idea: Many said a higher priority for their members remains extension of the Bush income-tax rates for higher earners that are set to expire at the end of 2010. Obama and many congressional Democrats want to let those breaks expire.
Administration officials hope businesses spooked by the faltering recovery but with investments already on the drawing board will rush to take advantage of the tax break. The tax would be retroactive to Sept. 8, the day it is announced, so businesses won’t delay planned investments while waiting for congressional action.
This is what you call desperation.
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Chippy commented:
Blah, blah, blah! This president, all he talks about is unions. This 50 billion dollar stimulus is a pension bailout for the unions.
FreakyBoy commented:
How stupid are these people?
Allowing the Bush tax cuts to expire will only offset the economic benefits of Obama’s proposed business tax cuts.
Zero sum baby.
bill-tb commented:
Yep, but it is consumers that make the economy go round. And they need jobs, and that needs demand …
What Obama knows about free market economy, you could write on a Kenyan pinhead.
antilbr commented:
STUPID is as STUPID does….Can we start impeachment hearings already….This IDIOT could’nt run a lemonade stand in the middle of the Sahara desert…MORON……
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squeaky commented:
and market watch predicted stimulus fraud could be 50 billion just 15 months ago. ripe for the wolves in society who know the chances of being caught are probably nill. now the next round covers 6 years – stretch it out long enough and bet that the dupes forget the gist and accept the re-write.
http://www.marketwatch.com/story/stimulus-fraud-could-hit-50-billion
chuck in st paul commented:
A short term fart into the hurricane of negatives.
It’s not about accelerated tax write-offs! It’s the cost of labor and the HUGE tax bite coming in January. Add to that fears of a carbon tax and a VAT which will destroy consumer demand through skyrocketing prices, and what business would be foolish enough to invest in new plant and equipment??!!?? To put the icing on the cake, there’s Barry’s push to switch us from cheap easy to produce energy supplies into unicorn farts, dilithium crystals, and perpetual motion machines which is going to cause severe shortages of supply and skyrocketing energy costs which will also add to prices of goods and services.
The 52% still don’t get the picture. They are mildly annoyed that Utopia has been put on hold while they consider that Barry might have oversold it, or… quelle surprise! He might have lied..!!!!eleventy!!
Get out and vote in NO!-vember. This has got to stop!
Agent 99 commented:
HMmmm!!! My post went ‘zip’
This is TEMPORARY and two…it’s a Tax Credit!! As someone on Yahoo noted “Right! CREDITS?…No Tax Cuts. Well. I’ll start saving BHO “”CREDITS”" for his reelection in 2020/Sarc….
Agent 99 commented:
JIM!! DESPERATION!! Exactly!!! ((In the meantime..just NOW saw this)) In just 120 days, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:
First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:
Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
Ginger commented:
What the fraud/Kenyan is doing has been planned for years. Every thing he does is to take down our country. His plan is to make America a Muslim country. Our country is loaded with natural resources that the Muslims want.
Hey you union WORKERS how long do you think that the Kenyan fraud is going to keep bailing you out? How many of you are “Whiteys?” GET IT THROUGH YOUR GREEDY THICK HEADS… YOU ARE JUST PAWNS TO THAT FRAUD! Sorry for shouting but someone has to start waking the union people up. THEY ARE JUST BEING USED. The union leaders are the only ones that are really benefiting with their big salaries! You a you shoud take a bigger look at their books and you would most likely NOT like how they are really spending your money.
hermie commented:
Except the ‘tax cuts’ will have so many conditions (such as specific ‘green’ or ‘sustainable’ requirements, or union labor requirements) that manufacturers will have to spend much more and go through far more red tape than they would have constructing a regular facility. But Obama will claim that he offered a ‘tax cut’ but ‘greedy corporations’ refused them.
Multitude commented:
Actually, the write-off for R&D may be useful… in assisting companies in R&D of further automation investments which will allow for even lower levels of domestic employment.
What a surprise, coming from a community agitator and a bunch of career government types who’ve never spent a day in a real business.
Palinfan commented:
Those of us on the right who are paying attention are not fooled by this sudden reversal in policy by Obama – it’s plain to see he’s flailing as election time bears down. However, I can’t imagine that anyone watching him carefully from the left will be pleased either. They absolutely hate the idea of tax cuts. This should be interesting.
KR commented:
Agent 99 #8,
The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
———————
If this is accurate, then the Bush Tax Cuts gave the lowest bracket the largest percentage of a tax break. So much for the false claim that it just benefited the rich.
And now with the Bush tax cuts ending the lower earners will have their tax increase by 50%, compared to only 3-4.6% for the other brackets.
JerryT commented:
hermie
September 7th, 2010 | 7:13 am | #10
“Except the ‘tax cuts’ will have so many conditions…”
—- You hit the nail on the head! Add to that, they will screw business and us, in some other way. Gov’t never gives credit or allows cuts without picking it up somewhere else.
Joanne commented:
Election time – better govern closer to the center. It isn’t believed that this next 350 billion dollar stimulus is going to pass before the November elections, which gives the democrats ample time to push BS and never ever intend to implement it. Obama lied before the last election to win, and he hasn’t stopped yet.
averagemelon commented:
#10
So Astute!
All of us must remember: EVERYTHING THAT COMES OUT OF THE PRESIDENT’S MOUTH IS A LIE. Start from this fact and plan ahead. This country is going to economically collapse on January 1. 2011.
kato commented:
Leftist administration demonstrates yet again that it doesn’t understand the dynamics of a vibrant free-market economy.
After legislating the most onerous regulatory regime since war rationing during World War II, and having not written any of the rules, business remains paralyzed in this country.
Who is going to build, who is going to hire in the face of such uncertainty?
The Obama Politburo is building billions of dollars of bridges to nowhere, creating some jobs now but saddling the future with colossal liabilities. A recipe for disaster, but standard operating procedure for leftists. Uncle Joe is in hell, smiling.
Agent 99 commented:
SORRY!! Here is the rest FROM ‘me’ @ # 8
Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care tax credit will be cut.
The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.
Higher tax rates on savers and investors. The top capital gains tax will rise from 15 percent this year to 20 percent in 2011. The top dividends tax rate will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
Agent 99 commented:
CON’TD
SECOND WAVE of Tax Assaults
Second Wave: Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The Tanning Tax. This went into effect on July 1st of this year. It imposes a new, 10% excise tax on getting a tan at a tanning salon. There is no exemption for tanners making less than $250,000 per year.
The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Brand Name Drug Tax. Starting next year, there will be a multi-billion dollar tax assessment imposed on name-brand drug manufacturers. This tax, like all excise taxes, will raise the price of medicine, hurting everyone.
Economic Substance Doctrine. The IRS is now empowered to disallow perfectly-legal tax deductions and maneuvers merely because it judges that the deduction or action lacks “economic substance.” This is obviously an arbitrary empowerment of IRS agents.
Employer Reporting of Health Insurance Costs on a W-2. This will start for W-2s in the 2011 tax year. While not a tax increase in itself, it makes it very easy for Congress to tax employer-provided healthcare benefits later.
Agent 99 commented:
CONT’D
Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”
Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed. Until this year, a retired person with an IRA could contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
http://www.jct.gov/publication…nc=startdown&id=3646
aprilnovember811 commented:
Don’t buy it. Obama is a committed Muslim, practicing Taqiyya. He is lying, and he will try to use this to get votes, and then turn on a dime, once people are sucked into his web. You know that saying, “Fool me once shame on you, fool me twice, shame on me.” We knew Obama is a liar, and criminal, many didn’t. If they don’t by now, they are hopeless causes.
jomojava the infidel commented:
Dear Gateway Pundit commentors,
Go ahead and talk about me. I know who I am.
Barak Hussein al-Bama, MD (Mongrel Dog)
free` commented:
“through 2011″
He just doesn’t get it. Giving a tax break for 1 year will not get it done. Businesses look down the road farther than that when making big decisions like that.
Tom commented:
These are not tax cuts. These are tax “credits”, which by any definition are completely open to manipulation and ultimately control. They do not fundamentally or structurally change any individual or businesses marginal tax rates. Furthermore, how many small businesses have “R&D” budgets?
The administration’s ignorance of basic economics–deliberate or just as a fact—borders on criminally negligent.
TT commented:
Something is wrong with that deficit chart. Sept 30, 2010 is the end of FY 2010, not 2009. And the deficit for the prior year seems to small to include the first year of Obamanomics. Did you leave a year out?
T.L. Davis commented:
There are a few things wrong with everything I’ve heard proposed. First, being able to write off a significant purchase on the first year rather than over several is the best idea yet to come out of the administration, except that any purchases today will probably be substantially USED equipment since there is a major surplus of equipment and Real Estate already on the market, so few jobs will be created by these purchases.
Second, a Tax Credit does absolutely NOTHING for a small business, like mine, which is running at about 20% of previous gross income. I don’t need a write-off of taxes I don’t owe because I have HUGE losses on the books.
Idiots
Murgatroyd commented:
“Temporary investment incentives like this can have big effects because they really pull investment forward”
Right. Just like the homebuyers tax credit, and just like Cash for Clunkers — they pull investment forward.
<i<And then what? When the tax credit expires at the end of 2011, what do you think happens? Investment spending dries up, because it has all been pulled forward … and there’s nothing following it.
Either Obama is profoundly incompetent and believes that socialist economies actually work, or else Obama actually is competent and is deliberately following the Cloward-Piven plan. I haven’t decided which possibility is more unsettling.
Dracovert commented:
You knew Obama was a Marxist before he was elected.
You know Marxists are more interested in equality than in prosperity, and are willing to sacrifice prosperity for equality and for dependence and obedience from the masses.
You know that Marxists systematically violate the law and Constitutional principles to expand their power.
You know that items like health care, stimulus indebtedness, and Government Motors are Marxist priorities to gain political power, and the prosperity of working Americans is not a Marxist priority.
We elected a Marxist as president, he is implementing Marxists policies, and now you discover that you do not like the direction things are going.
Now is a hell of a time to start thinking about it.
Nick Reynolds commented:
I think that would be a lemonade stand in a KENYAN desert.
Dracovert commented:
Hoft -
TT at 2218 hours has it right; your chart is distorted.
The Clinton “surplus” peaked in 1999, and was falling like a rock in 2000 while Clinton was still in office. It was falling like a rock because the Bubba Dot.com Bubble crashed in January 2000, one solid year before Clinton left office, and the NASDAQ fell $2.5 trillion before Clinton was gone.
Within the last few months, Hillary and Axelrod both were on Sunday talk shows claiming that the Clinton surplus could have been extended to a multi-trillion surplus except for George Bush. But that ignores the fact that the NASDAQ, the DOW, government revenues, and the surplus were pointed down, down, down, down before the time Clinton was gone.
To illustrate how ridiculous the Hillary/Axelrod claims are, consider:
A normal price/earnings (P/E) ratio for a stock or for an index falls in the range 7-26. 7 is grossly underpriced and a recovery may be expected, 26 is grossly overpriced and typically signals the start of a recession. The highest index P/E ratio ever recorded before Clinton fell off the turnip truck was the DOW at 32 at the start of the Great Depression. The DOW was at a sky-high 46 when it cracked under Clinton, and the NASDAQ was at an astronomical 65. If Hillary/Axelrod really expected a $5 trillion surplus, they must have expected a P/E ratio in the hundreds to justify their projections. Never. Happen.
Back to the chart. It would be helpful to have a vertical line at the end of year 2000 to delineate the Clinton/Bush transition.
BBC commented:
Unfortunately, a reduction in taxes does not mean a reduction in government spending.
The link between revenue and spending has been broken.
The government will continue its deficit spending in the face of revenue loss, making the over all situation worse.
I’m afraid, this is another attempt to buy votes and not help the economy.
bobby b commented:
I can’t wait . . . .
BO: So, I can promise this big tax break for buying new equipment . . .
TG: Uh huh, uh huh!
BO: . . . and then later throw in that they have to buy union-made products . . .
TG: . . . uh huh, uh huh!
BO: . . . from my buddies’ companies . . .
TG: . . . yeah! (giggle) . . .
BO: . . . and they have to hire so many new employees to run the new equipment . . .
TG: . . . yep! . . .
BO: . . . and, once they hire all those newbies, THAT’S when I bring out my new “Unemployment Comp For Life” bill, so those new employees will all be included once the bill passes . . .
TG: . . . hee hee hee hee . . . yeah, man . . .
BO: . . . . and then hit ‘em with the Fair Health Care Part Two bill, which makes them responsible forever for the health care for everyone who’s an employee of theirs as of that date . . . .
TG: . . . isn’t it GREAT?! . . . .
BO: . . . and if they try to go bankrupt, I can just pick any other company I want to transfer the life obligation to, so the workers don’t get shafted . . . .
TG: . . . oooo ooo ooo here’s the good part coming!! . . .
BO: . . . . and we sneak “all citizens of Mexico” into the definition of “employee” and I get to assign them to employers right away?
TG: Pretty cool, eh?!
BO: Oh, man, I am SO gonna send every one of those dumbass “Hope and Change” feebs a Ramadan card this year!
TG: I . . . uh . . . . Huh?
Mike commented:
Obamanomics is the perfect embodiment of why centralized economies fail to produce prosperity. The people in charge of all the money are irresistibly drawn to making decisions that benefit themselves first, the nation second. These repeated “stimulus” programs are nothing but aid to the unions and other favored constituencies that form the foundation of the Democratic Party’s power base.
Power corrupts; economic power corrupts absolutely!
Paul in NJ commented:
> Obama now wants tax cuts for business.
But not ALL business. By allowing the Bush tax cuts to expire on “the rich” — those bastards who make more than $200,000 — The One proposes to punish a helluva lot of small-business owners who report their business incomes on their personal tax returns.
Which merely confirms (as if any more was needed) that no one in this administration has the slightest effing CLUE how business works — and that’s because no one in the administration has RUN a business.
November 2 can’t come soon enough. No, strike that — Reid/Pelosi will have too much time to further damage the economy even after the people have spoken, damn them. No, the seating of the new Congress can’t come soon enough.
John West commented:
I have always been a huge fan of America. I even lived there for ten years back in the 60s and 70s.
It used to pain me to hear Canadians talk about how superior we are to Americans because we are smarter and nicer and have a better political system and so on.
I always disagreed and argued that America was the best on the planet.
I cannot say that anymore. I still love what’s left of America, but I have a lost respect for a people who would vote in this imbecile Obama.
I recognized from the outset just as Sean Hannity did, that Obama was a fraud and an empty suit.
This day, while your leaders are grasping at straws and so is much of your population I have to say, Canada is looking a lot smarter than you.
You can blame Bush and Obama for everything, but there is another side to this … the American people themselves who so overused credit to have it all right now and to have more than many of you could possibly afford … well, you are all paying the price for greed, stupidity, envy and mostly your lack of good sense in electing leaders. Stop being bought off.
I hope that with the Tea Party and people like Sarah Palin, The Fox crew, Rush, Miller, many of your current politicos who do know what’s what … and all those sweet voices of freedom and prosperity on the right, yes … I hope that you can pull out of this quagmire and smarten the hell up for the future.
And by the by, you are right to fear and loathe the Muzzies, you are right to want an end to illegal immigration … and it’s time to end stuff like affirmative action, quotas, the womens movement, etc.
And what’s with the ‘black caucus’ in Washington? Is there a white caucus too? If not, why not? The black caucus reminds me of that coffee club they call the UN for despotic African leaders. End all those socially distorting programs and policies that divide and ignore the shouts of racism.
Sticks and stones baby.
If you don’t smarted up and learn to live better, your leaders will lead you all to hell.
Dr. Deano commented:
Businesses that can are looking to get out of America.
I know of one very large Fortune 10 company that is going to lay off over 50% of its American workforce over the next two years and move those jobs to China and India – and I’d bet good money there other companies planning to do the same.
We shouldn’t be surprised. They are doing so because it has become clear that the costs of labor (non-wage labor costs), taxes and regulatory compliance in the US are and will to be increasing – significantly – due to Obamacare, Financial Reform, etc., and massive increases in regulation issued by unelected bureaucrats at the state and federal level.
The Democrats have really ‘baracked’ up our economy.
mark l. commented:
Dracovert-
the potential for a surplus was not met because we didn’t make enough revenue for govt, but rather exclusively based on the increase in federal spending.
worth looking at the actual clinton budget projections…
http://www.cbo.gov/ftpdocs/3xx/doc387/pb03-98.pdf
(page 16)
the link provides the expected revenues and govt spending thru 2008.
computer graphing skills are beyond ability, but the graph of projected revenue in the clinton budget would show bush falling short of the projections, until AFTER the 2003 tax cuts, where the bush admin actually move past the rate of revenue by 06.
likewise, the govt that clinton based his surplus budget on was projected to grow at 2.9% per annum.
ex?
2006-
clinton projected revenue: 2.333 trillion
actual revenue:2.41 trillion
clinton projected govt spending:2.211 trillion
actual spending:2.66 trillion
2007-
clinton projected revenue:2.446 trillion
actual revenue:2.54 trillion
clinton projected govt spending:2.303 trillion
actual spending:2.78 trillion
If hillary wants to lament the disappearance of the surpluses, she is actually advocating a reduction in govt spending, NOT an increased level in taxation.
***************
the simple reason this isn’t discussed is that the gop doesn’t want to admit to blowing the surpluses on the budget, and the dems don’t want to admit that govt revenue was BETTER than even clinton projected.
we are stuck with two parties who are either too stupid to look at the numbers, or too embarrassed to admit the failures of their own ideologies.