Business Investment Essential to Stimulating Economic Growth, Sununu says
WASHINGTON—New Hampshire Sen. John Sununu, addressing a meeting of the New England Council Thursday, said Congress must increase incentives for small business investment, eliminate the double taxation of dividends and encourage better corporate behavior to reverse the business investment slowdown, which he blamed for the current economic situation.
“This is not an economic slowdown that’s driven by a lack of consumer spending, it’s not driven by high interest rates, it’s not driven by inflation,” Sununu said. “It’s driven by a slowdown in business investment, and if you want to pretend otherwise then you’re going to end up making bad policy decisions.”
Sununu said President Bush’s economic stimulus package is a comprehensive attempt to encourage corporate, medium and small businesses-which he said account for 60 percent of all New Hampshire jobs-to invest.
The first step to encouraging small businesses to take investment risks is by extending depreciation schedules for the technology upon which companies are increasingly dependent, Sununu said.
QUOTE/EXPLANATION
The second step to encouraging economic growth through business investment is by eliminating the double taxation of dividends, Sununu said, an issue on which the junior senator has been outspoken in recent weeks.
Sununu joined congressional leaders and senior citizens at a press conference Wednesday on Capitol Hill to lend further support to the president’s proposal to end the tax.
Sununu told council members-many of whom are representatives of large New England businesses- that several major companies such as Microsoft, Cisco, Dell and Intel currently hold billions of dollars in cash because it is a bad investment for the companies to return the cash to shareholders as dividends.
Therefore, Sununu said eliminating the double taxation would encourage companies to pay dividends.
“That means the value of the stock market is going to go up, period,” Sununu said. “That’s not hypothesis or conjecture or hope, that’s a fact. If the cash flows coming from a given stock are higher or from the market are higher because dividends are more attractive, then the underlying value of stocks will go up.”
Sununu assured the proposal would not only benefit big corporations or wealthy stockholders, but would affect millions of retirees, half of whom receive dividends.
“Don’t think for a minute that this doesn’t have a broad and significant impact on consumers, on investors and on people across all incomes,” Sununu said.
The third step to increasing business investment is encouraging better corporate behavior, Sununu said, which can also be improved by eliminating the dividend tax. It would force companies to make responsible investment decisions to benefit shareholders and instead of following policies based on tax incentives.
“I’m all for making the jobs of CEO’s tougher where making good investment decisions are concerned,” Sununu said.
Richard Ashooh, vice president of legislative affairs for BAE Systems North America, was one of many representatives from the company, which has a major facility in Hudson and has been a council member for at least two decades.
Ashooh said that he recognized Sununu’s proposals are controversial as the country prepares for a possible war with Iraq, but said he believes they are essential to stimulating economic growth.
“It’s often said that you should fix your roof when the sun is shining, but I don’t think we can wait anymore at this point,” Ashooh said.
Published in The Manchester Union Leader, in New Hampshire.
