In an effort to give businesses more cash on hand while simultaneously encouraging them to spend and invest, the Obama administration plans to propose in a speech Wednesday a new tax write off for capital investments, according to multiple media reports.

Under the proposal, businesses would be allowed to deduct from their taxes the full value of new equipment purchases through 2011. Under current law, deductions occur over a period of three to 20 years, and oftentimes businesses do not receive deductions totaling the full cost of the equipment purchased. However, because of the stimulus package, companies were allowed to write off 50 percent of such investments in 2008 and 2009.

“This unprecedented step would be the largest temporary investment incentive in American history,” the White House said in a statement.

According to the White House, the plan would save businesses approximately $200 billion over the next two years. The plan would cost just $30 billion over the next 10 years, as deductions that would normally occur in future years would disappear.

Numerous individuals and 1.5 million businesses would benefit from the change in tax policy, according to the White House.

The tax breaks would be retroactive to September 8, the day the plan is announced, and extend through December 31, 2011.

Many economists believe, as EconomyInCrisis.org has emphasized for years, that allowing a shorter depreciation schedule for capital investment could be a boon for the domestic economy.

“Temporary investment incentives like this can have big effects because they really pull investment forward,” R. Glenn Hubbard, dean of the Columbia University School of Business and a former chairman of the Council of Economic Advisers under President George W. Bush, told The Wall Street Journal. “This could have a big stimulative effect.”

Unfortunately for American businesses, the bill will still need to be passed through Congress, which could prove to be easier said than done given Republican opposition to seemingly every Obama proposal introduced, even those they ideologically support.

“The White House is missing the big picture. These aren’t necessarily bad proposals, but they don’t address the two big problems that are hurting our economy—excessive government spending, and the uncertainty that Washington Democrats’ policies, especially their massive tax hike, are creating for small businesses,” House Minority Leader John A. Boehner said in a statement (R-OH).

Under the proposal, companies would be able to deduct the cost of equipment such as tractors, wind turbines, computers and solar panels, as well as investment in manufacturing facilities. The tax changes could discourage outsourcing, offshoring and other forms of corporate restructuring that ship American jobs overseas. An increased demand for capital equipment could also be a boost to American factories.

“This measure would provide tax incentives for businesses to invest in the United States when our economy needs it most, which should both help create jobs now and expand the capital stock to support future growth,” the White House said on Tuesday.

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