From Bloomberg’s economic roundup story, “Recovery Accelerates as Company Spending Rises Most Since 2006“:
In his Jan. 27 State of the Union address, the president proposed extending through 2010 a temporary tax incentive that encourages businesses to accelerate purchases of equipment. The 50 percent write-off may give a boost to capital expenditures if approved by Congress.
“It will help companies to make capital investments, which is what you need in a weak economy,” Monica McGuire, senior policy director of taxation for the National Association of Manufacturers in Washington, said in a telephone interview.
Slack remains in the economy. About 68.6 percent of U.S. manufacturing capacity was in use in December, compared with an average of 81 percent since records began in 1948.
Major tax increases may counter the effect of the accelerated depreciation, however.
From Barron’s, “Girding for ‘Son of Stimulus’“:
Ironically, while Congress clashes over the proper proportions for the new stimulus, a growing numbers of interest groups are urging the president to throw caution to the wind and take far bolder action. A study prepared by the Milken Institute at the behest of the National Association of Manufacturers recommends $426 billion in new infrastructure projects over the next three years to create close to 11 million jobs. The same study recommends a lower corporate-tax rate and lifting some export controls on technology, moves that it estimates would create another three million jobs. The cost of these would amount to $43 billion. The thinking is that taxes paid by new hires would help defray the costs.
The study Jim McTague is referring to is “Jobs for America.”
In November, China announced it would establish a national catalog of products that are to receive significant preference in government procurement decisions. To be registered, products must contain intellectual property that is developed and owned in China.
In a Jan. 26 letter, 19 U.S. trade associations labeled those rules “an unprecedented use of domestic intellectual property as a market-access condition” that makes it impossible for U.S. products to qualify unless they establish Chinese brands and transfer their research and development of new products to China.
The NAM is one of the trade associations that joined the letter.
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