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As stimulus goes, tax credits are a notoriously weak tool. The Americans have a great deal of experience in this matter, given their proclivity for fiddling with tax cuts when they should be building infrastructure. Their results are unimpressive.

As a structural policy tool, I quite like accelerated depreciation for its shrinking effect on balance sheets. But I strongly doubt that it's going to substantially alter the capital structure of a country. Although you could probably combine it with a reduction in the deduction for outgoing interest, and end up with a package that would discourage excessive leverage while remaining more or less distributionally neutral.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jan 27th, 2011 at 11:33:28 PM EST
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Tax credits are viewed as a good in and of themselves by the US RW, provided they primarily benefit the wealthy. Calling one a tool is just to put a condom on it, for the protection of the wearer.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jan 29th, 2011 at 05:57:52 PM EST
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