Word: adr
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Dates: during 1970-1979
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...credit would be the second big break for business so far in 1971. Last January the Administration granted businessmen a speeded-up depreciation allowance on machine and equipment spending. This so-called "asset depreciation range," or ADR, increases by 20% the pace at which investment in equipment can be written off. In effect, it is a tax reduction. If Nixon's proposed investment tax credit were added to the ADR, corporations would stand to gain a total of about $7 billion in tax reductions in fiscal 1972. By contrast, the Administration's program would bring about savings...
Critics contend that the investment credit, on top of the ADR, not only is inequitable but also fails to meet the immediate problems of unemployment and a sluggish economy. They point out that with industry running at only 73% of capacity, corporations have scant reason to buy more equipment. Thus the tax savings, in the opposition's view, is a windfall that would do little more in the short run than boost profits. Most labor leaders oppose the idea, maintaining that it would do little to whittle down the jobless rate in steel, aerospace, autos and other major industries...
...reforms increased jobs without stirring inflation; annual economic growth climbed from 2.3% to 6.3%, and unemployment dropped from 6.7% to 4.5%. "But there are differences between today and ten years ago," says Joseph Pechman, chief of economic research at the Brookings Institution, who prefers the tax credit without the ADR. "Now we have low capacity after a long period of investment boom. Back then we had low capacity after a long period of low investment. We needed the combined stimulus of rapid depreciation and investment credit...
...opposes Nixon's current tax package. His view: "It's a case of upside-down economics, because while investment stimulus is needed, consumer stimulus is needed even more." In the view of Heller and some other top economists, an investment credit should be adopted now, but the ADR should be jettisoned and greater cuts should be made in personal income taxes...