Later this week, the House of Representatives is scheduled to take up the a bill that is exactly the kind of legislation we need to see more of if Congress truly wants to set policies to help American manufacturers grow, compete, create jobs and strengthen communities.
One may ask how a single bill can do all of this?
The bill I’m speaking of is, H.R. 4718, authored by Rep. Pat Tiberi (R-OH) and would make 50 percent first year expensing (aka “bonus depreciation”) permanent. This bill is one of the handful of bills moving through the House this spring and summer that seek to make various provisions of the “extenders” package permanent. And, and it’s a very important bill for manufacturers. This bill would extend retroactively to the beginning of 2014 provisions which were in place and working up until they expired at the end of 2013.
Why is this bill so important for manufacturers? Manufacturing is a capital intensive industry and those costs have three significant factors: the price of equipment, the cost of financing and the tax treatment of the investment. Bonus depreciation lowers the after-tax cost of capital, increasing the number of profitable projects a firm can undertake and helping spur the growth in business investment. And so in the 7 months since it expired uncertainty has settled in. And uncertainty slows investment. Our March 2014IndustryWeek/NAM Survey of Manufacturers confirms that the expiration of the on-again and off-again investment tax incentives have companies holding off on making key purchases and thus delays the robust economic growth we need.
What does this really mean for Main Street? With pro-investment tax policies, companies like Marlin Steel Wire Products can invest in new cutting edge technologies like the IDEAL welding system. As Drew Greenblatt, the President of Marlin Steel put it, “policies like these allow companies like us to take a risk, put our necks out there and invest.” There are only five of these automated welding machines in the world and Marlin Steel, located in Baltimore, Maryland, is now the only company outside of Germany that owns one. According to Greenblatt, the investment in this new technology means that, “now our employees have the greatest technology at their disposal and now they can compete even better with foreign competitors. This machine will help us make a faster, more precise part and clients will be happier and order more products. This will help protect our employees’ jobs and help us to grow and hire even more employees.”
As we at the NAM have heard time and time again, policies that incentivize investment – especially when those policies are permanent – will help the economy take off because companies large and small will be able to take risks and invest and grow.
So yes, bills like H.R. 4718 will help Marlin Steel make a better material handling basket and so much more. The NAM urges all members of the House of Representatives to vote for this important pro-growth, pro-manufacturing legislation.