They may seem buried in political wrangling over how to help business cope with the recession. But the two investment incentives President Obama proposed last week — full expensing of capital expenditures through 2011 and locking in the research-and-development tax break — have companies applauding the goal of lower levies on spending vital to their growth.

The big questions posed by skeptics: Can the measures win enough support to pass before the midterm elections in this severely partisan Congress? And if they do, will the White House undercut the corporate benefit with higher taxes in other areas?

“The 100% expensing of capital investment for us would be a positive thing,” Steven Paladino, executive vice president and CFO of health-care products and services provider Henry Schein, tells CFO. “We do between $40 million and $50 million of capital expenditures [a year], and probably 60% to 70% of that will be in the U.S. and subject to U.S. tax law.”

Would any incentive-related investment be for new projects? “I can’t say that; it would more be for accelerating,” answers Paladino, who notes that the spending likely affected would be for distribution equipment and “additional IT equipment, whether hardware or software.” But from the company’s view, “it’s a nice positive” having cash back to use for other business purposes, he says.

The permanent installment of the R&D credit would benefit more than just classic research-intensive firms, adds Paladino. Take his own, which sells “our own practice software for our clients,” giving Melville, New York-based Schein “a small portion of our business in that technology segment.” Thus, the proposed R&D break, though to a smaller degree than the capex cut, “would again provide us the opportunity to have additional tax dollars to use for other corporate purposes,” he says.

Columbus, Indiana-based engine maker Cummins thinks “anything that promotes investment in capital has the potential to help businesses that may want to invest but have been sitting on the fence because of the economy,” says a company spokesman. But “it’s hard to say to what degree this tax deduction would spur investment,” he adds, noting that while the issue has been on CFO Pat Ward’s plate, the company feels it is premature to comment in much detail.

In Minneapolis, a Medtronic spokesman welcomes any “legislation specific to making the R&D tax credit permanent.” He says the credit both encourages innovation and job growth in Medtronic’s medical-technology industry, and helps remove uncertainty about proposed temporary extensions of the past.

The R&D tax rate “has been on the books a long time, and it’s been extended 13 times or so,” notes Marc J. Gerson, an attorney with Miller & Chevalier who formerly was the Republican majority tax counsel to the House Ways and Means Committee. And for companies, uncertainty —”not so much about if the credit will be extended, but when — has created a financial-statement disclosure issue.”

But President Obama, he says, “fails to identify the revenue offsets to pay for these initiatives.” Higher taxes may be needed on oil companies and on international operations, he says, since the total cost of the two incentives, plus $50 billion in infrastructure spending, is $180 billion. “That’s a lot of revenue to come up with.”

Gerson notes that “the political aspects of introducing the proposals” — in a Parma, Ohio, speech in which the President lambasted Republicans for opposing his business incentives — could lead to “some debate about how effective these mechanisms will be in inspiring investment.” Also, “there’s limited time to get it done,” he points out. Congress has “a short work period ahead, and they have to consider the small-business bill, too,” before leaving for the midterm election break.

“We have always supported increases in expensing. But not this, not now,” says Jade West, senior vice president of the National Association of Wholesaler-Distributors. “The pay-fors are not explained,” she says, echoing Gerson’s concern. West thinks the White House’s proposal “will not convince a business that is uncertain about rising taxes, especially the increase in those top [individual] rates; rising regulations, including the new 1099 proposal; rising health-care costs; and no stability.”

Still, companies are watching the broader political picture closely both for signs of progress from the latest incentives and for clues about whether new taxes — perhaps on non-U.S. business — might undercut the current proposals. “We have 35% of our revenues outside the U.S.,” notes Schein’s Paladino. “So at this time we have dedicated some resources to keeping an important watchful eye on Washington.”

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