Douglas K. Woods, president of AMT-The Association For Manufacturing Technology, told members of U.S. House of Representatives Small Business Committee that the American Recovery and Reinvestment Act has so far had only a minimal effect on the manufacturing industry. The Act is widely known as the federal “stimulus.”
In his July 15 testimony, Woods told the committee that AMT supported several business tax provisions that were included in the Act, notably a one-year extension through 2009 of the 50-percent bonus depreciation on new equipment purchases, and the enhanced Section 179 expensing on new and used investments.
“Our companies have been faced with customers who normally might be encouraged by these provisions to invest in equipment, but who either cannot get the working capital to do so, have sunk into loss positions this year and no longer qualify, or who are just too reluctant to make investments until they have a better sense of where the economy is headed,” he said.
Woods said the Association’s members need the depreciation incentives extended through 2010, at least, for the stimulus to be effective for them.
“I truly do believe that the future holds promise and opportunity if our industry can make it through the next six months,” Woods said.
Woods cautioned the Committee that the U.S. needs a strong manufacturing technology sector in order to avert “trading our dependency on foreign oil for a new dependency on foreign technology.” He called that prospect “frightening.”
He expressed optimism that another provision included in the stimulus bill — expanding the Net Operating Loss carry-back from two to five years — would offer some relief to companies that fell into loss positions in 2008. However, Woods observed that many of AMT’s member companies did not fall into loss positions during 2008, and that the provision would only help if it were extended to companies that experienced losses in 2009 and 2010.
Woods proposed a six-month reprieve from paying certain federal business taxes, such as the payroll tax. He urged the Congress to act immediately to help loosen credit for small businesses, particularly manufacturers.
And, Woods cautioned against enacting any new taxes against American businesses. “Congress will undo virtually everything it has been trying to do now to put our economy into recovery,” he testified.