Encouraging, if sketchy, news out of yesterday’s meetings between President-elect Obama and congressional leaders: A stimulus plan could include some $300 billion in tax relief, including substantial incentives for business investment
The Associated Press, “Obama stimulus plan boosts business tax refunds”
WASHINGTON (AP) — President-elect Barack Obama’s proposed stimulus package would provide businesses with billions of dollars in refunds on taxes they paid several years ago.
The refunds are popular among business groups and could increase pressure on Republicans to support Obama’s massive stimulus package, even though most of them are wary of government spending increases that could send its total cost to $800 billion or more.
“This gives companies an infusion of cash just when they need it,” Dorothy Coleman of the National Association of Manufacturers said of the proposed refunds.
Obama’s proposal to stimulate the economy includes tax cuts of up to $300 billion, including more than $100 billion for businesses.
The refund provision would enable some companies posting losses last year to get refunds for taxes paid as far back as five years earlier. The businesses could refile their old tax returns, using the losses suffered last year to offset profits made when times were good.
The term of tax art is net operating loss carry-backs. The NAM has consistently advocated the carry-backs, as you can see in this January 2008 statement from NAM President John Engler:
A Five-Year Carry-Back for Net Operating Losses (NOLs): Allowing companies in a downturn to “carry back” current losses to earlier, profitable years, will free up funds that can be used for investment and job creation. The net operating loss (NOL) carryback provisions enacted in 2002 provided much needed relief to a number of manufacturers. In one case, an NAM member was able to reopen a plant, in part because of the refund the company obtained from the NOL provisions.
- The Wall Street Journal’s piece provides more details, “Obama’s Back-Tax Bonanza” Also…
- Washington Post, “Obama Pitches Stimulus Package to House Republicans”
- Boston Globe, “Economists divided over cutting taxes” Well, of course, they are. That’s boiler plate, you know: “Economists divided over …” and then you plug in the policy divisor.
All in all, good, pro-growth tax provisions being discussed as part of the stimulus bill. Everywhere else that would be a tautology — “stimulus plan contains pro-growth provisions” — but here in Washington, you never know.