NEWS TIP: America Should Look To Past To Develop An Economic Stimulus Plan
Duke professor says main parts of president's package lacks support
Wednesday, February 12, 2003
With the economy stalled, the federal government should develop a "true economic stimulus package'' that does not burden future generations with debt, a Duke University professor says.
The cornerstone of the president's current growth package -- elimination of the taxation of dividends received by taxpayers -- appears dead, said James Cox, Brainerd Currie Professor of Law at Duke Law School. This provision, he added, is "even eliciting skepticism and outright embarrassment by some members of his own party."
That means the time is now to develop a real stimulus plan that draws on lessons from the past, said Cox, an expert in corporate and securities law.
"Investment tax credits and accelerated depreciation of assets were useful in the past," Cox said. "The problem is that those solutions frequently were slow to prompt businesses to invest.
"We could address this by providing these rewards for new capital investment for only the next two or three fiscal years, thus causing managers to understand the 'use it or lose it' benefits that Congress is offering. Indeed, more rapid depreciation is something that may well be introduced through depreciation guidelines that the IRS could initiate in large measure without Congress' approval."
The government could also provide a one-time cash payment to taxpayers, particularly the working poor and middle-income taxpayers, Cox said.
"Because each of these changes would be of limited duration, they avoid the problems posed by the Bush Administration's overall tax plan, namely burdening the future with large deficits that become the debt burden of our children and their children,'' Cox said.
"They would be a true stimulus package, not a package that serves no purpose other than to provide greater separation of the upper class from other citizens of our nation."
Cox can be reached for additional comment at (919) 613-7056 or cox@law.duke.edu.
