Counting on Tax Cuts To Bring Businesses New Year’s CheerDecember 27, 2010 – In The News
The two-year extension of the George W. Bush-era tax rates came as a relief to business owners who feared higher taxes with the start of the new year. Businesses will be able to cut their income taxes by expensing the value of most computer, furniture and other business-asset purchases made between Sept. 9, 2010, and Dec. 31, 2011, in one shot instead of writing the cost off over a long period. Also, for one year, the employee portion of Social Security payroll tax will fall from 6.2 percent of taxable income to 4.2 percent.
According to Phillip Griffin, the Social Security tax cuts and lower personal income tax rates might not have much of an effect on corporate spending. “But the write-off might encourage firms – even service firms, like us – to accelerate computer or other purchases into an earlier period,” said Griffin. “It might be similar to the homebuyers’ credit, which also accelerated sales as people tried to beat the expiration deadline.”