The Spring ComethBy Paul Campbell
Article Date: 04-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
Evidence of good things to come is budding in the Economic Stimulus Act.
After the long winter comes spring. It's inevitable and always a welcome time of year. If you live in areas of the country that experience the cold and snow, spring holds special meaning as the seemingly endless grip of winter starts to loosen and the snow and ice begin to melt. Perhaps as predictable as the changing seasons are the economic cycles we all face. Good times will follow the bad just as surely as springtime follows winter. However, just as there are signs of spring, there will be signs of better things to come. One of these first signs lies in the Economic Stimulus Act that Congress passed and the President signed into law in February. This compromise stimulus package reinstates the equipment bonus depreciation first passed in 2002 and increases the Sec. 179 expensing limit. This particular section of the ESA is designed to create incentives for companies to invest in assets used in the course of business. Allowing for business investment provides incentive for customers to invest in equipment and dealers to invest in rental fleet using cash the first year that would otherwise be paid as tax under existing code. The impact of the first bonus depreciation and Section 179 expensing provisions were tracked and quantified by AED staff - here's what they found.Key FindingsIn early May 2003, National Utility Contractors Association (NUCA) members were surveyed to determine what impact the 30 percent depreciation bonus enacted by Congress as part of the 2002 Job Creation and Worker Assistance Act had on their equipment purchasing habits. The survey, sponsored by AED, also sought to determine what impact increasing the depreciation bonus and small business expensing levels might have on NUCA members' future equipment purchasing decisions. The survey results suggest a strong correlation between capital investment incentives enacted by Congress and equipment purchasing by businesses. Put simply, capital investment incentives work. The NUCA/AED survey found that:
n Of the survey respondents who were aware of the new depreciation rules, 67 percent said that the bonus had prompted their companies to invest in new equipment in the prior 12 months.n Fifty-nine percent of all survey respondents said that their companies had been prompted to purchase equipment in the prior 12 months because of the depreciation bonus.Undoubtedly, there exists a direct correlation between the stimulus package and the purchasing of equipment by end users. Therefore, AED members should promote ESA's provisions and encourage customers to take advantage of the current stimulus package by purchasing equipment in 2008. Depreciationbonus.org, a Web site created by AED's Washington staff, outlines what the Economic Stimulus Act does and how it can benefit both equipment dealers and equipment end users. The sidebar information is from the Web site and more information is available online. (Editor's note: Please see Joanne Costin's article on page 42 of this issue, as well.) As winter gives way to spring, hope can produce new strength. I am optimistic that things will get better economically, and soon we will experience the economic spring we all anticipate.
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