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Obama Calls for Capital Investments Tax Credit

President Barack Obama hit all the electorate’s hot buttons in a speech Wednesday afternoon at Cuyahoga Community College in Parma, Ohio, in an attempt to outline in stark terms the differences between the Republican and Democrat positions in the November elections.

Though there were no surprises in the President’s remarks, he did deliver on proposing a tax break for businesses that he said would encourage greater “long-term investment in our country’s future.” The new tax break would allow businesses to write off 100 percent of their new capital investments. This would expand stimulus measures enacted in 2008 and 2009 that allowed business to depreciate 50 percent of their capital investments.

He also called for a massive $50 billion infrastructure investment to upgrade the nation’s railways, highways and runways and a permanent expansion of research and development tax credits for companies.

The President said the new tax break would help small businesses upgrade their plants and equipment.

The reaction from the small business community was largely positive, although some critics suggested that the President didn’t go far enough.

“This really could make a difference,” aid Pablo Solomon, an artist in Austin, Texas, who said the measure would enable him to afford an $8,500 printer and expand and upgrade his art gallery. “A number of businesses have held off for a long time to see what the economy will do. The economy is as much a matter of perception as it is of reality. Once you get people to spend, you get a snowball effect.”

The Small Business & Entrepreneurial Council (SBEC), while applauding the new measures, believes the Administration’s measures don’t go far enough.

“Allowing business to fully expense capital expenditures certainly is a plus,” said Raymond J. Keating, the SBEC’s chief economist. “Unfortunately, making it temporary is gimmicky, and results in different timing of investments, not necessarily more investment. Entrepreneurs, businesses and investors need permanent, pro-growth tax relief. That would mean permanently giving businesses the option to expense capital investments. It also means making the 2001 and 2003 tax cuts permanent.”

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.