The Association of Equipment Manufacturers (AEM) on July 14 urged Congress to reinstate the 50% bonus depreciation, a tax provision that helped equipment manufacturers last year during painful economic times. AEM said the bonus depreciation was especially valuable to smaller companies as an effective economic stimulus tool, helping them stay in business and provide jobs.
The bonus depreciation provision allows businesses to deduct 50% of the cost of new equipment in the year it is placed in service. The provision was included in the Economic Stimulus Act in early 2008 and extended to 2009 by the American Recovery and Reinvestment Act.
“Given the sluggish pace of the economic recovery, AEM strongly encourages Congress to use this proven, effective, pro-growth policy and extend the bonus depreciation benefits for small businesses,” stated AEM President Dennis Slater.
Slater noted that the equipment industry has been hard hit by the economic downturn, shedding 37% of its workforce and experiencing sales declines of 50% between January 2007 and September 2009.
AEM submitted the comments in a letter to the House Committee on Small Business, which held a hearing on “Bonus Depreciation: What it Means to Small Business.”
“We are deeply concerned with any matter impacting the small business community,” said Slater, who voiced AEM support of the Associated Equipment Distributors’ hearing statement as well.
AEM and AED extensively promoted bonus-depreciation adoption by Congress in 2008 and have previously supported a 2010 extension. The two equipment associations produced an informational booklet in 2008 to assist companies to use the provision.