By February 12, 2014Taxation

noun \in-ˈsen-tiv\  : something that encourages a person to do something or to work harder (from Merriam-Webster)

For the past several years, Congress has seen fit to enact policies that would incentivize capital investment namely through an enhanced Sec. 179 and what is referred to as bonus depreciation. While the investment caps and phase-outs have varied over the past 10 years, one thing that has remained constant is that Congress has agreed that an incentive for companies to make capital investments is good economic policy. As we stated in our comments to former Senate Finance Committee Chairman Max Baucus’ staff discussion draft on cost recovery and accounting tax reform, a basic premise of economic theory is that investment is a positive function of an increase in demand and a negative function of costs. The cost of capital to a firm includes three components: the price of capital equipment, the cost of financing the equipment and the tax treatment of investment. Thus, policies like the enhanced Sec. 179 and bonus depreciation make sense. Of course just because the economic theory makes sense, since we’re dealing with our tax code, it’s not as simple as that because like many other commonsense tax policies (including the R&D credit to name one) the enhanced Sec. 179 and bonus deprecation incentives expired at the end of 2014.

Now, while the NAM has long advocated for comprehensive tax reform that results in a pro-growth, pro-competitive, permanent, simpler code, while we slog through the process of getting to the “new and improved” code, we need to ensure that the right policies are in place so business can continue to grow and compete. This is why manufacturers support the extension of these incentives because for manufacturers it’s not just giving them incentives to buy new equipment and machinery but it ensures that for those who make equipment and machinery that their customers are able to make these purchases as well. Consider the nearly 40 percent of farmers who according to an article who aren’t buying machinery in 2014 mainly because of uncertainty around Sec. 179. And if manufacturers don’t have as many customers for their products then our still struggling economy won’t have as much of the juice provided by manufacturing. The impacts on manufacturing are particularly important because for every $1.00 spent in manufacturing, another $1.48 is added to the economy, the highest multiplier effect of any economic sector.

So while manufacturers await much needed comprehensive tax reform, keeping pro-growth tax incentives in law certainly makes sense.




Carolyn Lee

Carolyn Lee

Executive Director of The Manufacturing Institute at The Manufacturing Institute
Carolyn Lee is Executive Director of The Manufacturing Institute, the non-profit affiliate of the National Association of Manufacturers (NAM), the nation’s largest industrial trade association. Carolyn drives an agenda focused on improving the manufacturing industry through its three centers: the Center for the American Workforce, the Center for Manufacturing Research, and the Center for Best Practices.

In her role, Carolyn leads the Institute’s workforce efforts to close the skills gap and inspire all Americans to enter the U.S. manufacturing workforce, focusing on women, youth, and veterans. Carolyn steers the Institute’s initiatives and programs to educate the public on manufacturing careers, improve the quality of manufacturing education, engage, develop and retain key members of the workforce, and identify and document best practices. In addition, Carolyn drives the agenda for the Center for Manufacturing Research, which partners with leading consulting firms in the country. The Institute studies the critical issues facing manufacturing and then applies that research to develop and identify solutions that are implemented by companies, schools, governments, and organizations across the country.

Prior to joining the Institute, Carolyn was Senior Director of Tax Policy at the NAM beginning in 2011, where she was responsible for key portions of the NAM’s tax portfolio representing the manufacturing community on Capitol Hill and in the business community and working closely with the NAM membership. She served as the Director of Legislative and Government Affairs at the Telecommunications Industry Association, Manager of State and Federal Government Affairs for 3M Company, and in various positions on Capitol Hill including as Legislative Director for former U.S. Senator Olympia Snowe (R-ME), and as a senior legislative staff member for former U.S. Rep. Sue Kelly (R-NY).

Carolyn is a graduate of Gettysburg College in Gettysburg, Pennsylvania graduating with a B.A. in Political Science. She resides in Northern Virginia with her husband and three children.
Carolyn Lee

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