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If it works so well, why does the economy still stink?

September 10, 2010

Jim Maule poses good questions about the proposal to allow full deduction of fixed assets purchased between now and the end of next year:

The previous incarnation of section 168(k) “bonus depreciation” as well as continual expansion of section 179 expensing have been consistently hailed as solutions to the nation’s economic woes of the moment. Yet no evidence exists that these tax giveaways have had the claimed effect. Why is it, for example, that during 2008 and 2009, while businesses basked in the benefit of 50-percent bonus depreciation, the economy got worse, not better? Where are all the jobs whose creation was promised when the proposal for the 2008 and 2009 tax break was being trumpeted as the answer? Where is the economic recovery that supposedly was an inescapable consequence of enacting those tax breaks? Similar questions can be asked about the long parade of tax breaks for business investments during the past 50 years.

Like all good witch doctors, the politicians need to wave their wands frantically and sacrifice some chickens, just so they look like they're trying to do something. Then when the recovery comes anyway, someday, they can claim the credit, and meanwhile they say things would be worse otherwise.

Tags: maule.Obama tax policy.stimulus.