Obama puts an end to tax breaks for the richest
The speech of Barack Obama on Wednesday in Cleveland, Ohio, leaves no room for doubt. The U.S. president has been firm in formalizing its decision not to extend tax breaks for the wealthiest Americans granted by his predecessor George Bush, and which end in December.
"We are willing to offer tax relief to every American $ 250,000 relating to a year or less. For any amount above the rates revert to what they were under President Clinton, "said Barack Obama. "This is not to punish people who are better off, because we can not afford to pay 700 billion dollars," he added."These people are those who are least likely to spend money, which is why economists do not think tax cuts for the wealthy are doing much to the economy."
The President also highlighted his plan to allow companies to fully deduct from their taxes the cost of their investments in 2011. This program would consist of 200 billion dollars in tax relief over two years, most of which would then be reimbursed to the federal state. The U.S. president also confirmed his new plan to $ 50 billion to build or renovate facilities in the United States.
Barack Obama also proposes a plan to boost tax deduction for companies investing in research and experimentation.A device valued at 100 billion dollars over 10 years.
The president assured that he would work with Congress to ensure that these measures are financed by reducing other devices already voted. He also acknowledged that the measures launched two years had not worked "as fast as we had hoped.
Attack against Republicans
Barack Obama wants to show its willingness to revive the economy while the looming midterm elections in November. Highly virulent, the President described his opponents Republicans "fiscally irresponsible".
Barack Obama is personally took it to John Boehner, the Republican leader of the House of Representatives which proposes a tax rate freeze for two years and a reduction of federal spending to reduce their amounts at their 2008 level ."Boehner measures are summarized in tax cuts for millionaires. It proposes no new idea. The same philosophy that led us to today's problems, Barack Obama has launched. "It's always the fear against hope, the past against the future" no fax payday loans.
"You can not have a stronger economy if you raise taxes on the very people whom you expect to invest in the economy and they hire people again," said John Boehner for his part on the ABC.
Marginal effect
"Part of the problem in the U.S. economy lies in the fact that companies do not spend their income and maintain a very conservative approach," Aneta Markowska analysis, economist at Societe Generale CIB.
"Obama wants to ensure that the investment is not sinking like a bellows with the expiration of the first battery of stimulus measures," said Florence Pisani, an economist at Dexia AM. The investment has rebounded strongly in the first and second quarters, jumping by 20 or 25%. But it remains at levels well below those before the crisis, and economists expect it to slow down.
Economists are divided, however, the effectiveness of the measure on the investment. The federation believes that SMEs could, ultimately, help companies "at the margin," reports the Wall Street Journal.The level of capital spending by SMEs are at their lowest for 35 years, business leaders should take advantage of tax breaks to loosen their purse strings, the newspaper said.
Demand problem
Problem, "companies will not invest only to take advantage of the tax measure, they must observe and anticipate an increased demand for it," recalls Florence Pisani. They may well wait until the last moment, that is to say late 2011, to appeal to tax exemptions, so that the uncertainty surrounding growth dissipates, say analysts at Goldman Sachs. Boring for the Obama administration wants to boost the economy immediately.
Still, the measure to 200 billion may never pass the dam of Republicans in Congress.The conservative Senators leave nothing to pass to Obama, a few weeks they have elections to win. They also believe that these two new measures amount to recognize the ineffectiveness of the stimulus plan of 787 billion voted in February 2009.
Obama will just play during the upcoming debate, stressed that his latest measure for companies will not increase public debt of the United States. It only makes immediate tax rebates so far over the lifetime of investments.
See also:
"How companies slow recovery