A Small Step in the Right Direction15:08 07/09/2010The Obama administration is now proposing that businesses be allowed to expense investment expenditures. That is, for purposes of calculating taxable income, businesses would be able to fully and immediately deduct the cost of equipment, rather than having to gradually deduct the cost via depreciation allowances. This is a good idea. People are feeling poorer and more uncertain about the future. The rational response is greater saving. The trick to restoring aggregate demand and full employment is to channel that saving into investment. Normally, the Fed can help by lowering interest rates. But with interest rates at the zero lower bound, that option is not available. Tax incentives for investment can help achieve what monetary policy would if it could. However, the impact will be relatively modest. Notice that expensing merely accelerates deductions. Thus, the value to the firm depends on interest rates. With interest rates near zero, the impetus to investment is small. Put another way, this policy can be seen as giving firms a zero-interest loan if they invest in equipment. But with interest rates near zero anyway, the value of the loan is not that great. One can imagine more aggressive policies along similar lines, such as an investment tax credit together with expensing. But let's not make the best the enemy of the good. This policy proposal is a step in the right direction. I hope Congress passes it quickly and in a bipartisan fashion.  Комментировать | 0 комментариев Should the Bush tax cuts be extended?14:58 04/09/2010This seems to be the economic policy question of the hour. It might be worth recalling that last month, the Wall Street Journal polled economists about this question. Of those who expressed an opinion, here are the results:
 Комментировать | 0 комментариев Counting Small Businesses14:40 03/09/2010From Kevin Hassett and Alan Viard: Recently, for example, Vice President Joe Biden harshly rejected House Minority Leader John Boehner's assertion that the hikes would harm small businesses, saying that "he has created this myth that a tax cut for millionaires is actually a tax cut for small business. There aren't 3% of small businesses in America that would qualify for that tax cut."... In fact, the sound bite about 3% of small businesses, which has been picked up by numerous pundits, is one of the more misleading statements in the long history of economic propaganda. The 3% figure, which is computed from IRS data, is based on simply counting the number of returns with any pass-through business income. So, if somebody makes a little money selling products on eBay and reports that income on Schedule C of their tax return, they are counted as a small business. The fact that there are millions of people in the lower tax brackets with small amounts of business income may be interesting for some purposes, but it is irrelevant for the assessment of the economic impact of the tax hikes. The numbers are clear. According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007. That's the number to look at, not the 3%. Would Mrs. Pelosi and Mr. Biden deny that the more successful firms owned by individuals in the top income-tax bracket are disproportionately responsible for investment and job creation?  Комментировать | 0 комментариев This year's Freshman Seminar17:43 02/09/2010My freshman seminar starts today. Here are the book we are reading this year:
 Комментировать | 0 комментариев An Enlightening Example17:52 31/08/2010Chapter 1 of my favorite textbook talks about how policies can have unintended consequences because of their effects on incentives. One example I use is Sam Peltzman's famous study of seatbelt laws. Here, from The Economist, is another example: SOLID-STATE lighting, the latest idea to brighten up the world while saving the planet, promises illumination for a fraction of the energy used by incandescent or fluorescent bulbs. A win all round, then: lower electricity bills and...less climate-changing carbon dioxide belching from power stations. Well, no. Not if history is any guide. Solid-state lamps, which use souped-up versions of the light-emitting diodes that shine from the faces of digital clocks and flash irritatingly on the front panels of audio and video equipment, will indeed make lighting better. But precedent suggests that this will serve merely to increase the demand for light. The consequence may not be just more light for the same amount of energy, but an actual increase in energy consumption.  Комментировать | 0 комментариев |
Профиль пользователяСлучайные обзоры для изучающих экономику Смотреть полный профиль пользователя |
© 2009, Trust.ua По всем вопросам пишите на trust@trust.ua
О проекте | Связаться с нами | Разместить рекламу | Карта сайта | Принципы информационного ресурса ТРАСТ.УА
