Taxes, Capital Spending, and Jobs

Market strategist Barry Ritholtz explains why the Bush accelerated-depreciation tax break may actually be holding back hiring

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September 20, 2004 at 4:00 AM UTC

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Corporate spending got a boost this year from a change in tax rules called accelerated depreciation. This lets companies that purchase big-ticket items and equipment before yearend write off the cost sooner than usual. It has spurred capital spending in a variety of industries, particularly software, telecom, heavy trucks, and aircraft, says Barry Ritholtz, market strategist at New York investment firm Maxim Group.

BusinessWeek Online's Karyn McCormack recently spoke with Ritholtz, who has been studying the effects of the rule and what it means for the economy, and particularly for hiring. Edited excerpts of their conversation follow: