- Businesses would be allowed to write off 100% of new capital investments through 2011. Companies are already allowed to deduct these expenses, but the deduction is taken over a span of several years. This would be an upfront, immediate gratification business deduction. White House Economists estimate this could reduce business taxes by approximately $200 billion over two years.
- Permanently instate the tax credits for research and development. This tax credit is usually renewed and extended by Congress each year, which is time consuming. In addition, many business owners are frustrated in some gaps in the tax credit. Hopefully this new cut will solve those issues. The estimated cost of this proposal is around $100 billion over 10 years.
In times like this, business owners need every bit of help they can get, and these tax breaks will go a long way in helping businesses of all sizes. In addition, the way these breaks are focused will drive more economic activity – after all, someone has to make and sell the capital equipment, and research and development are crucial to keeping America moving forward.
On the other hand, since we are facing incredible deficits, we will have to make up for the lost tax revenue somewhere. The question is, where will it come from?
(Hat tip, NPR )