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Politics : View from the Center and Left
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To: Cogito who wrote (105004)2/26/2009 12:10:25 PM
From: TimF  Read Replies (1) of 542598
 
If they have lower profits, they will still be investing. Even if they are not net investors (investing more than their existing capital stock depreciates), they are at the very least gross investors. That gross investment continues even if the net capital stock is shrinking, and a tax credit for it would help it to go further (for X amount of gross investment you get X+the benefit of the tax credit, in investment), and also help incentivise more of it (since the expected after tax return of the investment would be higher).

I'm not 100% sure I agree with Kling. I tend to support cuts in rates ahead of credits. They provide more of the incentive effect. But I suppose his argument is more for stimulus, while mine is more for the long term. You would get the credit right away (or at least at the end of the tax period) if you invest, which might have an effect of moving later investment up, and perhaps that's what he's going for.
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