Heating Oil and Propane Dealers will Benefit Greatly from a Tax Cut Stimulus

It seems like everyone these days is paying close attention to the governmental stimulus package. It is for a good reason, though, as a shrinking economy means job losses and hardship for business owners trying to generate a return on their assets. And politicians and economists vary on the type and size of stimulus to offer. Should it be a works program? Should it be a tax cut? What will offer the best return of "invested" stimulus dollars?

Economists are divided on the payouts of different types of stimulus, but it is generally thought that a broad public works and infrastructure investment will yield an economic multiplier of one to two times the stimulus investment. That is, if one million dollars are invested, the GDP will increase by one to two million dollars. That range of rate of return is not particularly good. Using my personal finances as a litmus test, I ask for a more compelling return than simply "getting all my money back" when I invest.

Based on the work of Christina Romer (the chairperson of the Council of National Economic Advisors), we anticipate a much bigger multiplier for a tax cut - somewhere between 2.5 and 3.0 times the dollars invested.

Why? Because the government does not know the best place to spend money - but business owners do. Business owners like the men and women of our industry. If you had an extra 5% of cash flow, what would you do with it?

Would you take home more? Or maybe pay out larger salaries and bonuses to your employees to help them deal with these hard times? Each of these two options goose the economy by increasing consumer spending - as folks buy "stuff" from places like the Home Depot and "services" from people like the local landscaping company.

Would you use it to invest in additional capital items for your business? This is where the real and compelling bang for stimulus our buck is! Almost any business owner has the thought kicking around in his head "If I only had an extra $x dollars I could [buy that truck/build that plant/hire that person/invest in that new computer routing software] that would yield an immediate return to their business. When an asset is added to the business that can yield an acceptable risk-adjusted return, then the economy grows. This is true whether you are the local auto auction or the local heating oil company.

It is a challenge for government-types to think in the manner of the entrepreneur on a trillion-dollar scale. Finding worthy homes for the first couple hundred billion probably isn't that hard - but the returns diminish with the amount spent. As they say: "Easy Come-Easy Go."

So tax relief is coming to business owners throughout the nation. And your business is getting a raise. How will you employ the cash to grow your business and do your share for economic growth?