Tax Reform and U.S. Investment and Job Growth
Fed-Ex Chairman Fred Smith said tax reform was a key element for restoring strong U.S. economic growth. The Bowles-Simpson plan is his preferred approach, but he would like to see continuation of the now expired expensing provisions for capital investment in the stimulus bill. See today’s CNBC segment here:
His company and many others took advantage of the very powerful reduction in the cost of capital for investment from 2008-2010 via the Economic Stimulus Act of 2008 and subsequent legislation.
Scholarly work over the last two decades including some by ACCF Scholars John Shoven and Dale Jorgenson have shown that favorable investment provisions and the investment tax credit have a powerful impact on generating new investment. ACCF research shows that each one billion dollar increase in investment is associated with 15-22,000 new jobs and conversely decreases investment, cut employment by the same amount: