Industry Commends Tax Bill For Equipment Investment Incentives
Wednesday, June 04, 2003
June 4, 2003 -- Printing industry leaders were at the White House May 28 as President George W. Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act of 2003, which among other pro-growth provisions includes a powerful new 50% bonus depreciation provision for printing, publishing and converting machinery and other capital equipment. The new law also boosts from $25,000 to $100,000 the amount that smaller businesses (those whose purchases do not exceed $400,000 in a given year) can expense before taking the additional 50% bonus depreciation and regular depreciation. Equipment must be purchased and installed by December 31, 2004 to qualify for the 50% bonus depreciation; the $100,000 expensing provision expires December 31, 2005. Regis J. Delmontagne, President of NPES The Association for Suppliers of Printing, Publishing and Converting Technologies, commended President Bush’s leadership and Congress’s action in enacting tax incentives designed to re-start the stalled manufacturing sector of the economy. He said, "This legislation, unequaled in recent history, should help stimulate the market for new equipment purchases by firms that have held off making capital purchases. It’s a win-win situation for suppliers and users." His sentiments were strongly seconded by industry colleagues Michael Makin, President of Printing Industries of America/Graphic Arts Technical Foundation, and Joseph P. Truncale, President & CEO of the National Association for Printing Leadership, whose organizations represent tens of thousands of printers and their employees across the United States. W. Bruce Goodwin, President of Glunz and Jensen Inc., and a member of the NPES Board of Directors, who attended the bill signing ceremony in the East Room of the White House, also praised the President and congressional supporters. Goodwin, whose company manufactures and markets film and plate processors, stated, "These new tax incentives will be extremely helpful to manufacturers and their customers, by making new investment in more productive technologies more affordable." For example, under the new law a qualifying small business that buys a typical color scanner (which could range from $75,000 to $150,000) for $100,000 could expense it all in the first year, effectively reducing the cost to only $60,000 (assuming an effective federal and state tax rate of 40%). Another small business, a bindery purchasing a typical mid-range saddle stitch machine for $200,000, could expense the first $100,000 and then further reduce the cost by taking an additional 57% of first-year depreciation (50% bonus plus 7% regular), for a total of $157,000 of first-year depreciation (78.5% of the asset). Again assuming a 40% effective tax rate, the cost of the saddle stitch machine would be effectively reduced to $137,000, a 32% reduction in cost to the small business. Finally, a larger printer buying a fully loaded six-color, 56 inch wide sheetfed press with coater for $3.5 million could take a first-year deduction of 57% totaling $2 million, resulting in an $800,000 tax savings, effectively reducing the cost of the new press to $2.7 million in the year of acquisition. Clearly, these are enormous investment incentives that will be available to printers and their suppliers starting immediately, stated Delmontagne, Makin and Truncale. They all urged their respective members to take maximum advantage of the powerful financial leverage now available under the new tax law.