Eighteen state and national trade associations joined AED in a Feb. 25 letter to leaders of the Senate Finance Committee objecting to the committee’s proposal to create a new asset pooling system to depreciate business property and repeal like-kind exchange.
The letter to Sen. Ron Wyden (D-Ore.), who recently took over the committee’s chairmanship, and Ranking Member Orrin Hatch (R-Utah) expressed support for tax reform that improves the Internal Revenue Code (IRC) for both corporations and pass-through entities and creates a tax environment conducive to economic growth and investment. However, AED and its allies said the pool scheme, proposed in November 2013 (before Wyden took over the Finance Committee) would create unrealistically lengthy asset recovery periods for business assets that will negatively impact business cash flow and reduce economic growth and job creation. Because many companies will have to continue to track individual assets for business purposes, pooling would actually create new recordkeeping requirements and add complexity, the letter said.
The ad-hoc group also that objected to the committee’s proposal to repeal LKE, calling it “a powerful economic engine that promotes capital investment, improves business productivity, and creates jobs.” By deferring the tax consequences associated with replacing outdated equipment, LKE helps businesses invest in newer, more efficient and more environmentally-friendly machinery, the coalition said.
Tax reform is a hot topic in Washington at the moment. House Ways & Means Committee Chairman David Camp (R-Mich.) unveiled his reform plan late last month. However, given the short time left in the congressional calendar, new leadership on the Senate tax committee, and impending elections, no one expects tax reform to happen this year. However, it’s likely that the reform proposals we’ve seen from both sides of Capitol Hill will form the parameters of any future legislation, so it’s important for organizations and companies who don’t like what they see to speak up now.
AED was joined on the LKE/pooling letter by American Rental Association, Association of Equipment Manufacturers, AMT - The Association For Manufacturing Technology, Far West Equipment Dealers Association, Federation of Exchange Accommodators, Iowa-Nebraska Equipment Dealers Association, Iowa-Nebraska Equipment Distributors, Mid-America Equipment Retailers Association, Minnesota-South Dakota Equipment Dealers Association, Montana Equipment Dealers Association, National Automobile Dealers Association, National Tooling and Machining Association, North American Equipment Dealers Association, Ohio Equipment Distributors Association, Ohio-Michigan Equipment Dealers Association, Precision Machined Products Association, Precision Metalforming Association, and the Truck Renting & Leasing Association.