Twenty-three leading national trade associations in the US have called on Congress and the President to extend the capital investment incentives included in the 2008 Economic Stimulus Act.

The ESA, which became law in February, created a 50% depreciation bonus and increased the amount that small businesses can expense under Internal Revenue Code Sec. 179 to US$250,000. The depreciation bonus expires at the end of 2008 and the higher expensing levels apply only to 2008 tax years. Both provisions were aimed at encouraging business purchasing.

In a letter to President Bush and the bipartisan leadership of the House and Senate, trade associations representing a broad cross-section of the economy urged that an ESA extension of at least one year be included in any future job creation and economic recovery legislation. The coalition letter said that the ESA has had some positive impact on the economy and that there is strong evidence that the stimulus law has been a significant incentive for businesses that have been able to afford to make capital investments this year. However, current economic uncertainty is causing many companies to refrain from making new purchases, which is hurting distributors, retailers, manufacturers, and other types of business.

The letter cited a recent report from the Bureau of Economic Analysis that business purchasing fell in the first three quarters of 2008, the first three consecutive quarters of decline in six years. Similarly, the Institute of Supply Management reported on Nov. 3 that factory activity contracted sharply in October, falling to its lowest level in 26 years.

"Extending the depreciation bonus and higher Sec. 179 expensing levels would help reverse these dangerous trends and inoculate the economy against a more severe business purchasing downturn in the months ahead," the coalition told lawmakers. "Extending ESA would also enhance the impact and benefits of other components of the stimulus package (e.g., infrastructure investment)."

Construction related organizations signing the letter include the Air Conditioning Contractors of America, the American Concrete Pressure Pipe Association, the American Council of Engineering Companies, the American Rental Association, the American Road and Transportation Builders Association, the Associated Equipment Distributors, the Associated General Contractors of America, the Association of Equipment Manufacturers, AMT - The Association For Manufacturing Technology, the Engineering & Utility Contractors Association, the National Asphalt Pavement Association, the National Electrical Contractors Association, the National Lumber and Building Material Dealers Association, the National Ready Mixed Concrete Association, the National Utility Contractors Association, the National Stone, Sand & Gravel Association, and the North American Equipment Dealers Association.

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