12/02/2004: Thought for the Day:
[T]here are two scenarios before us. The first, touted by the administration, is that thanks in large part to the expiration of the depreciation tax break, corporate profits will rise sharply from their current levelsódespite the recent slowdownóand that companies will pay a higher percentage of their profits in taxes than in years past, thus bringing significantly more cash into federal coffers.
The second is that profits will grow at a slower pace in 2005 than they have in recent years, thus producing lower taxable profits than expected. And rather than simply pay the higher taxes that result from the end of the depreciation tax breaks, corporations will do what they always do: work with accountants, insurers, banks, lobbyists, and friendly congressmen to find new ways to reduce tax payments. As a result, the expected corporate receipts will fail to materialize. And instead of falling significantly in fiscal 2005, the federal deficit will stay at record-high levels.
My bet is on the second.
--Daniel Gross, on the expiration of the Bush bonus depreciation rules
Len on 12.02.04 @ 08:06 AM CST