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The White House is also hoping to regain political momentum with its new economic proposals aimed at helping businesses. As we've mentioned, the president has proposed tax incentives for investing in equipment, and research and development.
NPR's Wendy Kaufman spoke with some business leaders to see what they think.
WENDY KAUFMAN: If you walk into a fast-food restaurant, theres a good chance some of the components in the ovens and freezers were made by a St. Charles, Illinois, company called Bison Gear and Engineering. The companys owner, Ron Bullock, says the presidents initiatives could help.
Mr. RON BULLOCK (Owner, Bison Gear and Engineering): I think its a great step in the right direction.
KAUFMAN: He likes the idea that businesses which make new investments in plants and equipment in 2010 and 2011 could almost immediately deduct that cost from their taxable income. So their out-of-pocket cost of investing could be dramatically reduced.
Mr. BULLOCK: As a business owner, you're very sensitive to how the cash is flowing in and out, and this would be helpful. You know, we need to encourage investment.
KAUFMAN: Companies considering buying equipment containing his components might be more apt to make the purchase.
Across the country, Rob Arnold, the president of GeoSpiza, which makes software for genetic analysis, is also looking at the tax credits. He could use them for new computing and telecommunications gear.
Mr. ROB ARNOLD (President, GeoSpiza): As a small but growing company, we're just at that part of the process where were starting to make money as a business. And what we'll be looking at, as we plan our capital purchases in 2011, is this an incentive that we can really take advantage of?
KAUFMAN: He says the tax break alone won't be enough to prompt a purchase, but it would help. As for the R&D tax credit proposed by the president, Rob Atkinson, head of the Information Technology and Innovation Foundation, likes it. He believes the credit would keep more R&D at home, and bring some back to the United States.
Mr. ROB ATKINSON (Information and Technology and Innovation Foundation): Economists have long agreed that the research and development tax credit encourages companies to do more R&D than they would do otherwise. But in recent years, there have been new studies that show that it encourages companies not just to do more of it, but to do more of it in a particular place.
KAUFMAN: Atkinson says research suggests that well over 100,000 new U.S. jobs would be created if the R&D tax credit were as generous as the one proposed by the president.
But John Graham, who teaches at Dukes business school and who's director for the Duke/CFO Magazine Global Business Outlook Survey, says it's not clear any of the president's proposals will create a large number of new jobs, at least in the short term.
Mr. JOHN GRAHAM (Duke Business School): I think that this tax credit will help companies spend even more. The problem, though: Sometimes, you expand your company, you buy more machines, you actually employ more people. Other times, you buy machines that replace employees.
KAUFMAN: Still another issue: If companies arent turning a profit, these tax breaks won't do them much good. Indeed, what many businesses, including Bison Gear, seem to worry about most is taxes. They fear tax increases could offset any benefit from the proposed incentives - or even make their economic predicament worse.
Jay Timmons is executive vice president of the National Association of Manufacturers.
Mr. JAY TIMMONS (Executive Vice President, National Association of Manufacturers): The message seems to be: Well, we want you to invest, and we're willing to let you have this pot of money to do it with. But by the way, we are going to take this other pot of money away from you.
KAUFMAN: All of this will no doubt be debated, since the proposals have to be approved by Congress.
Wendy Kaufman, NPR News.
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