Industrial Insight

Obama supporting expensing capital investment would be huge! | September 8, 2010

http://www.ftportfolios.com/Commentary/EconomicResearch/2010/9/7/president-obamas-best-gift-to-labor President Obama’s Best Gift to Labor

Why do workers in America, or any
advanced country for that matter, have higher standards of
living than workers in the Third World?
Capital investment is the answer. Workers in
advanced countries have access to backhoes,
jackhammers, robotic machinery, computers, and
software. Workers in less developed countries don’t have
access to this machinery and often lack access to basic
tools. Imagine trying to build a house or a school when a
crew of six carpenters has two hammers between them

Under current law, companies that buy plant and
equipment have to depreciate these expenses over several
years. This depreciation makes investment look less
attractive, as inflation and the time value of money erode
the value of depreciation year by year. Allowing
immediate expensing would make it more attractive for
companies to buy capital goods, simplify book-keeping
and make taxable profits more equal to cash flow.

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About author

I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.

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