Today, an official from the White House has stated that the president is going to purpose a new economic policy that involves a tax create for research and development for small business. Reuter’s says this:
The proposal would cost $100 billion over 10 years, and Obama would pay for the plan by closing other corporate tax breaks, said the officials, who spoke on condition of anonymity.
Obama will call on Congress to increase to 17 percent from 14 percent one of two credit options available to businesses, the officials said
For most of Sunday, the pundits have been debating about whether this is about the economy or Obama is trying to play politics before November. I will speculate that it is probably both. By doing this, Obama cuts off the argument that Republicans have been pitching for the last month about extending the Bush tax cuts. The GOP claims that not extending the tax cuts would hurt small businesses, even though most small businesses do not make more than $250,000 a year, were the primary tax cuts have the biggest impact.
So what will Obama be selling with this new proposal, and more that he will propose on Wednesday? First, it will help him to “get local” before the midterms. Congress already passed a $26 billion state aid bill that would primarily go to education and helping states cover budget shortfalls. Small businesses are part of “main street” America, a group Obama desperately needs. Second, this package will expand credit to help small business hire and, at the same time, will fight the big bad corporations that populist anger despises.
Essentially, Obama has taken the GOP extend the tax cuts for the middle class and small business slogan and just created a tax credit for research and development that is targeted at that particular group that does not lose revenue for the U.S. economy, unlike the Bush tax cuts. I find it funny that Obama has just now killed one very strong GOP argument with one fowl swoop.