The proposal, to be laid out Wednesday in a speech in Cleveland, tops a raft of announcements, from a proposed expansion of the research and experimentation tax credit to $50 billion in additional spending on roads, railways and runways.

Companies can now deduct new investment expenses, but over a longer period of time—three to 20 years. The proposed change, which would let companies keep more cash now, is meant to give companies who may be hesitant to invest an incentive to expand, acting as a spur to the overall economy.

While some economists praised the investment-incentive idea, some business groups and congressional Republicans said their higher priority remained an extension of the Bush income-tax rates for higher earners that are set to expire at the end of 2010. Mr. Obama and many congressional Democrats want to let those breaks expire.

Jade West, senior vice president of the National Association of Wholesaler-Distributors, said she hoped the tax proposal "is something we could get behind, but the devil is in the details."