President Obama is rolling out a package of economic stimulus measures this week, and, along with new infrastructure spending, his proposals will include two business-related tax cuts: 100 percent deductible expensing for capital investments and making permanent the R&D tax credit. Obama will offer these proposals in a speech tomorrow in Cleveland.
Two influential business groups, however, are unimpressed.
With details of the proposals yet to be seen, Chamber of Commerce chief lobbyist Bruce Josten warned that the administration may pick winners and losers among different business sectors. Josten said in a written statement:
"The U.S. Chamber will support any proposal that spurs job creation, bolsters both short- and long-term economic growth. We will not support an approach where the government picks winners and losers--providing tax credits and incentives to politically favored industries and groups while sticking others with the bill. This is ultimately self defeating and puts politics ahead of sound economic decisions that can create jobs."Bottom line: This president and administration have had nearly two years to help turn around our economic situation. Their agenda of more taxes, regulations, and mandates clearly isn't working. In fact, it has created tremendous uncertainty and delayed and weakened the recovery."
At issue is whether the administration will offset these cuts and credits with other tax adjustments. If, for instance, the administration changes tax codes for the oil and gas industry in order to pay for the loss in revenue, those businesses (and thus the Chamber) won't be happy.
The National Federation of Independent Businesses, the nation's top small-business group, was similarly unimpressed by the plan.
"We don't think it's going to have a huge impact" on small businesses, said NFIB tax counsel Bill Rys, who pointed out that small businesses can already expense up to $250,000 of capital investment tax free and that not many small businesses are currently spending on research and development.
"Any business that's going to be aided by this is probably going to be larger," Rys said.