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US Corporate Capex Not Affected By Tax Incentive Renewal
Source:
tax-news.com
- Aug 15, 2014
Bloomberg BNA has issued a new study that cast doubts on the efficacy of United States tax incentives in boosting corporate capital expenditure, and pointed out the relative indifference of American businesses to their extension.
Bloomberg BNA's study, of 100 tax and accounting leaders at firms with average revenues of USD7.5bn, found that a huge 83 percent of respondents believed that the expiration of Section 179 expanded tax relief and bonus depreciation "has not impacted their organizations' capital expenditures this year."
As part of the pending "tax extenders" provisions that expired on December 31, 2013, Section 179 previously allowed smaller businesses to immediately deduct the cost of investments in property and qualifying equipment. On its expiry, its threshold fell from USD500,000, on up to USD2m of equipment, to USD25,000 on USD200,000 worth.
However, on the same date, the more important incentive of bonus depreciation, which allowed all levels of businesses to deduct 50 percent of the cost of new capital purchases within the first year, also expired.
Given their expected effect on boosting capital expenditure, the House of Representatives has already, this year, passed bills to provide for the permanent extension of both tax incentives. However, the Bloomberg BNA study found that, "concurrent with the finding that most organizations' capital expenditures haven't been affected by the expiration of [the tax incentives], only 30 percent of respondents feel that the tax policy changes could impact their willingness to invest."
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Category: General Business
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