Yet Gregg Dimkoff doesn’t believe President George W. Bush’s economic stimulus package that would eliminate the double taxation on dividends paid to investors would do much in the short term to stimulate the economy.
The proposed $670 billion in tax cuts are long-term measures for an immediate problem, said Dimkoff, a professor of finance at Grand Valley State University’s Seidman School of Business.
“It takes too long to really stimulate the economy. It needs stimulating right now,” Dimkoff said. “By the time all this happens, it’ll probably be too late.”
Bush included the dividend tax elimination in his $2 trillion budget proposal presented to Congress Feb. 3. The budget also proposes to accelerate income tax reductions and increase the child-care tax credit from $600 to $1,000.
Small businesses would have new incentives to invest through increases in expensing limits, from $25,000 to $75,000.
In recent presentations offering his economic outlook for the region, economist George Erickcek of the Kalamazoo-based Upjohn Institute for Employment Research supported the notion that the economic stimulus package wouldn’t provide much of a quick stimulus to the economy.
“It’s too little, too late,” Erickcek said during a recent presentation to members of the Muskegon Area Chamber of Commerce.
Still, Erickcek said, the tax cuts Bush proposed are good.
Even though Dimkoff doubts the proposal will provide much boost to the economy soon, he says he, too, is all for the proposed tax reductions, $364 billion of which would come from the elimination of double taxation on dividends.
“He’s making life a little more efficient. We have some bad taxes out there,” Dimkoff said.
Bush’s economic stimulus plan also has the support of West Michigan’s two congressional representatives.
U.S. Rep. Vern Ehlers, R-Grand Rapids, said following the president’s State of the Union address that he “was pleased with President Bush’s economic proposals, which focused on both short-term and long-term issues.”
“Too often, elected officials deal only with the short-term because it is expedient,” Ehlers said. “I am pleased that the president not only proposed short-term stimulus ideas, but also took a long-term view with ideas that will aid our economy over the next 15 to 20 years.”
U.S. Rep. Peter Hoekstra, R-Holland, also praised the economic proposal.
“The accelerated tax cuts will provide the average American with almost $1,100 in additional take-home pay this year alone. Because consumer spending makes up three-fourths of the nation’s economy, keeping money in the hands of taxpayers will help create long-term growth,” Hoekstra said.