Manufacturers Support Extension of Bonus Depreciation

Renewing Incentive Will Spur Capital Investment and Aid Economic Recovery

The National Association of Manufacturers (NAM) today urged Congress to extend bonus depreciation, a proven incentive for manufacturers of all sizes to invest in new, more efficient equipment, stimulating much-needed economic growth and job creation. 

Bonus depreciation allows businesses to immediately deduct 50 percent of the cost of new machinery, equipment and other essential capital investments.  Bottom line, it lowers the after-tax cost of capital equipment and drives demand for such purchases.  Thus, this increase in demand in capital goods boosts sales for manufacturers of these products and contributes to job creation and overall economic growth. 

“At a time when manufacturers face much uncertainty, this incentive will help them make needed investments and encourage job creation,” said NAM Vice President of Tax and Domestic Economic Policy Dorothy Coleman. “We appreciate the efforts of the House Small Business Committee to highlight the importance of bonus depreciation, particularly for the small manufacturing companies that are vital to our economic recovery.”

Investment in equipment and software has slowed from 19 percent in the fourth quarter of 2009 to just 11.4 percent in the first quarter of 2010. President Obama’s Fiscal Year 2011 Budget proposes a one-year extension of bonus depreciation. 

“Bonus depreciation has bipartisan and bicameral support and can help immediately create much needed jobs for manufacturers of all sizes. We will continue to work with Congress to speed the reinstatement of this important incentive that will help spur economic growth and provide relief to small businesses,” said Coleman.

 The NAM has outlined important tax policy changes to enhance our nation’s manufacturing competitiveness in the “Manufacturing Strategy for Jobs and a Competitive America.”

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