This article was last updated on January 6
[Update Jan 2013] Congress and the Obama administration have reached an agreement that will extend a number of small business tax breaks through 2013 following the fiscal cliff deal which was legislated through the Taxpayer Relief Act of 2012. You can see details of the extended tax breaks in this article.
[Update Sep-Oct 2010] Obama’s Small Jobs Bill has been approved and you can find more details in this post.
In an effort to provide a sustained job creation program, President Obama called for Congress to approve major upgrades to the nation’s roads, rail lines and runways — part of a six-year plan that would cost tens of billions of dollars and create a government-run bank to finance innovative transportation projects. He also wants to allow businesses to deduct from their taxes through 2011 the full value of qualified capital investments, from computers to utility generators, to boost demand for goods and create jobs.
“We used to have the best infrastructure in the world and we can have it again. We want to reform the way we fund and maintain our infrastructure to focus less on wasteful earmarks and outdated formulas, and we want competition and innovation that gives us the best bang for the buck,” Obama said, adding “this is a plan that will be fully paid for, it will not add to the deficit over time – we’re going to work with Congress to see to that.”
Small Business Capital Tax Deduction – 100% Expensing or “Bonus Deprecation”
By allowing a 100% deduction of capital investments, businesses of all sizes will be allowed to keep more money now and would give large corporations, many of which are sitting on cash due to uncertainty about the economy, an incentive to spend and invest; thereby creating new jobs. This measure, an expansion of a previous tax incentive designed to encourage businesses to invest in equipment, would cost an estimated $200 billion in revenues though the ultimate net loss would be $30 billion over 10 years, according to administration officials, since businesses would eventually deduct the depreciated value of the equipment in any case. A draft paper on the proposal permitting businesses to write off the full costs of capital spending in 2010 and 2011 said it “would be the largest temporary investment incentive in American history.”
The provision also seeks to expand and make permanent a tax credit for corporations’ research and development expenses; for three decades the credit has been enacted temporarily given its revenue cost and then always extended, but with frequent lapses that frustrate businesses.
Transportation Projects Stimulus Spending
The transportation or infrastructure stimulus calls for a quick infusion of $50 billion in government spending that White House officials said could spur job growth as early as next year — if Congress approves. The plan includes rebuilding 150,000 miles of roads; building and maintaining 4,000 miles of rail lines and 150 miles of airport runways, and installing a new air navigation system to reduce travel times and delays. Central to the plan is the president’s call for an “infrastructure bank,” which would be run by the government but would pool tax dollars with private investment to focus on paying for national and regional infrastructure projects.
President Obama will soon outline more details on the above proposals, including more stimulus ideas, and I will update this post as more details emerge. You can subscribe (free) via Email or RSS to get the latest updates.