Saturday, January 10, 2009

Lawmakers and Financial Experts Question Obama's Tax Cuts

From Washington

At least two tax cuts that are part of Barack Obama's stimulus package have been criticized by lawmakers, tax experts and economists for being potentially too expensive and ineffective, signaling that they are likely to face resistance on Capitol Hill as congressional leaders begin direct negotiations with the president-elect's team.

Both Democrats and Republicans have questioned a provision that would provide a $3,000 tax credit to companies for every job created and, possibly, for every job spared. They contend that the idea would be ripe for abuse and difficult to administer.

"I'm not that excited about that," said Sen. John Kerry (D-Mass.), as he left the first bipartisan Senate Finance Committee meeting this morning. A parade of lawmakers echoed the sentiment as they departed. "A lot of questions have been raised about the economic good it does," said Sen. Charles Grassley (Iowa), the senior Republican on the panel.

Lawmakers are also skeptical about a measure that would allow companies to deduct large portions of recent losses. The proposal would benefit companies that have been hit hardest by the recession, including in the banking and real estate sectors, but experts worry that costs could soar because so many would be eligible.

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