It’s all midterm-election politics, but Obama’s last-minute idea for 100 percent tax write-offs for corporate investment is, in fact, a good idea.
He proposes a two-year window to incentivize businesses to bring forward their investments. From the standpoint of investment, it’s the right way to go. Perhaps Larry Summers now thinks tax cuts are the right way to go, too.
CEOs like Fred Smith of FedEx have argued for full cash expensing for many years, along with a big drop in the corporate tax rate itself. This is what Team Obama should have done in the first place: Slash business tax rates and accelerate investment-depreciation schedules.
Years ago, Gary and Aldona Robbins did work showing that accelerated investment depreciation gives the biggest bang for the buck -- roughly $10 of new GDP for each dollar of faster tax write-offs for investment. Those write-offs, a lower capital-gains tax rate, and a cut in the corporate tax have been powerful economic stimulants in the past. [source]The problem may be that it's a bit late in the game... after spending all of those hundreds of billions on Soviet-style programs... but maybe better late than never. Of course, The One has no intention of giving up his Soviet-style programs because he might have something that actually helps the economy. He doesn't want to be perceived as a Conservative.