Although the public works expenditure side of President-elect Obama’s stimulus package is romantic nonsense, the tax cutting side of his proposals deserves more support in Congress than it is getting.

The President-elect is right to inject money into the economy, and cutting taxes is more likely to put that money in the right place, and to have a quicker effect, than most forms of government expenditure.

Moreover, although far from perfect, Mr Obama’s tax ideas are at least preferable to the idiotic notions of Gordon Brown’s government in the United Kingdom.

1   The Brown strategy was basically that the government borrow more in order to fund cuts in the Value Added Tax (VAT) on sales – in the hope that this would lead to increased sales; this, of course, implies increased consumer, as well as government, borrowing, despite the fact that it was excessive consumer and government borrowing that triggered this whole crisis!

2   The Brown strategy appears to have failed even to meet its own objective of encouraging consumer spending – which was entirely predictable, given that the small cut in sales tax is unlikely to have much impact on consumer choice, especially at a time when prices are falling anyway.

3   Though tax cuts are always welcome, this temporary change in the rate of sales tax imposed an expensive administrative burden on business hard to justify given it is due to be reversed in 1 year.

4   Many businesses did not even bother to pass the cut on to consumers – possibly because they needed it to pay for changes to their book-keeping systems (though lousy small business accounting software must carry its share of the blame).

5   The cut was of no use to the smallest businesses, who do not pay VAT, or to the very poorest families, who spend the greatest proportion of their income on basics, like food, on which VAT is not charged.

6   Mr Obama’s proposed tax credits would give people the choice whether to spend, to save, to invest, or reduce their debt, according to their individual needs.

7   Tax credits would benefit everyone, but those on low incomes would be proportionately best off – they are, incidentally, the people most likely to spend most of what they are given immediately.

8   Tax credits are easy to understand and swift to take effect, and they impose no additional administrative burden.

9   Given that existing legislative and tax burdens already make it likely that many jobs lost in this recession will not be replaced, Brown’s increase in “national insurance contributions” – basically a tax on jobs – is insane, but Obama’s proposed tax credit for employers is at least a step in the right direction.

Of course, much of the good of the last proposal may be undone if Congress passes increases in higher rate taxation and imposes additional burdens on employers to fund healthcare. However the recession might give Mr Obama the excuse he needs to junk some of the promises he made in the election campaign. Indeed, he will be forced to retreat from some of them – the question is which ones?