From: Athinarayanan Sanjeevraja
Date: August 3, 2013
RE: Your Economic Vision
Suggestion:
Good Morning Mr. President. Let me start by paying my respects to you
and through you to.
Mr. President, India’s Business Line reported that “Obama to outline his vision for rebuilding US economy.” American
economy may not grow as fast because US consumer spending crowds out investment
spending. But I see US economic outlook improve gradually during the second
half of 2013. According to me, investment spending is much more likely to be
growth enhancing. If I am not mistaken, US inflation rate was recorded at 1.8
percent in June 2013. Inflation is not at very high level in US. If inflation
is very high, it adversely affects fixed business investment. I identified
fiscal policy for instance, tax cut that stimulates investment spending.
Corporate tax rate should be lowered, an investment tax credit should be given
to American companies who’s establishing or expanding their business in US.
Such changes in tax policy can enhance investment spending because firm’s
investment spending decisions are made in the light of after tax cost and
returns.
Mr. President, it is vital to have proper balance in the American
economy between consumption and investment but consumption spending should not
be promoted at the expense of investment. But investment spending plays a vital
role in stimulating slumping economy. So I request you to increase in the
investment tax credit. As a result, a certain percent of the purchase price of
new goods could be taken as a credit off of the firm’s tax. In addition,
Federal Reserve should act to lower interest rate which would encourage
investment spending. Federal Reserve already keeps the interest rates low. The
low interest rates of the global financial crisis 2008 certainly contributed to
the American economy recovers from the crisis.
Let me now conclude Mr. President, as has been pointed out, business
investment spending is very important now to the fast economic growth. Declines
in business investment spending often contributed to the economic recessions or
downward economic growth. According to my analysis, fiscal policy action, for
instance, increase in the investment tax credit for companies to stimulate
investment is deemed desirable.
Thank you for your attention.
Sincere Regards,
Athinarayanan
Sanjeevraja.
Athinarayanan
Advisory Authority
Athinarayanan
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