For some 15 years, the electronics manufacturing industry has pushed for changes to the US capital equipment depreciation laws.
In fits and starts, various groups have converged on Washington and lobbied legislators to shorten the five-year cycle for fully depreciating new machines, saying the move would make the US more competitive with other manufacturing-reliant nations. Thanks in part to 9/11 and subsequently in response to economic cycles, lawmakers have from time to time accelerated the schedule to three years and raised the amount small businesses could write off.
This week, President Obama offered full capital depreciation (and also said he would make permanent the much-sought-after research and development tax credit), but with a catch: American businesses would no longer get tax breaks to launch operations offshore. “There is no reason why our tax code should actively reward them for creating jobs overseas,” Obama said.
The National Association of Manufacturers supports the accelerated depreciation laws (it would be hard to see why it wouldn’t), but reportedly has come out against the other proposed changes to the tax code. As I’m sure NAM is aware, by statute hits to the US Treasury must be made up elsewhere. Politics is the art of compromise and tradeoffs. I would urge our industry trade groups to collectively agree on what the electronics industry can afford to live with, and what it can’t — and fast. They will be much more effective if they speak with a unified voice.