The core of an economic stimulus package will be tax incentives for businesses and individuals. The idea is to get money into the hands of people most likely to spend it, thereby infusing needed cash into the economy. The challenge is whether the Congress and the White House will be able to reach consensus on tax provisions that are equitable and meaningful. The obstacles are many. Congressional Democrats must first decide if they will insist on keeping their “pay-go” pledge, which requires them to offset any spending and tax cuts with offsetting “savings” from other federal programs.
Some Democrats have said they are willing to spend as much as $100 billion in the coming months for tax rebates, housing assistance, unemployment benefit extensions and aid to cash-strapped states. President Bush wants a $150 billion package with $100 billion targeted at individuals and $50 billion for businesses. The White House plan would allow businesses to write off 50 percent of the purchase of equipment immediately.
Small business interests are seeking faster write-offs of new equipment, while large businesses are appealing for lower corporate tax rates. And the home builders are pleading to offset their taxable income in years past with the losses they are suffering today. The PHCP industry is already feeling the impact of a possible recession. The challenge for the industry is to make sure that the final benefits of a tax package outweigh the negatives. ASA will be vigilant in its efforts to make sure that the industry is represented during this period of negotiations over a stimulus package.
If Congressional Democrats hold to pay-go, ASA will be aggressive to ensure LIFO repeal is not used to finance the tax package. If estate tax repeal is considered, ASA will join with its allies to seek a compromise if one surfaces. If a legislative proposal from the retail industry to provide 15-year depreciation on retail facilities, ASA will renew its efforts to make sure that the 15-year write off applies to supply house showrooms.
Without real bipartisan efforts, enacting legislation to jump-start the economy will stall and lead to continued finger pointing by both parties. Whatever twists and turns this process takes, ASA’s efforts will be focused on ensuring the passage of an economic package that promotes the best interests of our members and the PHCP industry at large.