PIA Says Economic Security and Recovery Act Partially Meets Industry Aims
Press release from the issuing company
ALEXANDRIA, VIRGINIA – To spur the flagging U.S. economy following the tragic events of September 11 and increase the depreciation schedule for computer equipment, the Printing Industries of America (PIA), Incorporated, is supporting passage of the Economic Security and Recovery Act of 2001.
Most recently the bill assigned H.R. 3090, passed the U.S. House of Representatives’ Ways and Means Committee. Next will be a vote before entire House, then onto the Senate and anticipated signing by President Bush. The bill offers a variety of tax reductions and incentives, as well as unemployment benefits designed to keep the economy moving forward.
For the past six years PIA has campaigned the federal government to reform the Modified Accelerated Cost Recovery System (MACRS) so the depreciation schedule for computers and their peripherals is shortened. Rapid technological advancements to these products render them virtually obsolete before the full value of the purchases can be actualized. Also, PIA advocates changing the definitions for computer and peripheral equipment in the tax code to better reflect the software and components.
A provision in the Economic Security and Recovery Act of 2001 includes "1) property to which MACRS applies with a recovery period of 20 years or less except for leasehold improvements," and some computer software.
Summarizing its position on the bill, PIA’s Government Affairs Department writes, "Although it is unfortunate that it took the tragic events of September 11 to spur Congress into action on this issue, we feel that the temporary changes in the bill will be helpful incentive for investment. These are the types of tax cuts that are needed to help get our economy moving again."
Further cost recovery provisions include increases in the maximum dollar amount that may be deducted under section 179 of the U.S. Tax Code from $24,000 to $35,000 from 2002 to 2004. For industries such printing, the top amount increases from $200,000 to $325,000.
The Act lowers the top revenue rate for companies using the Alternative Minimum Tax (AMT) to recoup costs for capital investments in its first three taxable years from $7.5 million to $5 million. PIA remains committed to a full repeal of the AMT.
Other provisions in the recovery Act include the following: repeal of the corporate AMT, increase in the net operating loss (NOL) carryback from two to five years, elimination of the NOL 90 percent deduction limitation, and a reduction in the capital gains tax rate.
Despite what actions Congress may take in the near future, PIA recently predicted the U.S. economy slipping into recession the third and fourth quarters of 2001, and begin a recovery in 2002. PIA based is opinion on the results of a survey jointly conducted by its Economic Research and Government Affairs departments. Print sales will decline for 2001, but are expected to recover and experience growth in 2002.
In dollar terms, the overall impact on the financial position of the U.S. printing industry as a result of the attacks September 11 are extremely significant. The difference between expected industry sales and profits for 2001 and 2002 before and after September 11 is an anticipated loss of approximately $6 billion in sales and $1.5 billion in profits.
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