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Economic Stimulus Package — Time to Act: Now

May 2008 By Erik Cagle
Senior Editor
SOME PUNDITS have called it “window dressing,” and others have termed it a last ditch effort to put a positive spin on the back end of what will become President Bush’s legacy. All politics aside, the Economic Stimulus Act of 2008 (H.R. 5140), which the president signed into law in late February, is intended to pump life into an economy that is bordering on—if not already wallowing in—a recession.

Beginning this month, taxpayers will begin receiving between $300 and $600, depending on marital status, and $300 per child with limits based upon household income. Thus a working married couple with two children and a household income of $80,000 would receive $1,800, as long as they filed a tax return.

From a business standpoint, printers, trade finishers and mail houses that purchase equipment after December 31, 2007, and install it before January 1, 2009, can be eligible for 50 percent bonus depreciation (technically, the depreciation is accelerated) and possibly enhanced IRC Section 179 expensing. On the latter, the limit on capital investment during 2008 that can be expensed was raised from $128,000 to $250,000 for companies that purchased less than $800,000 in capital assets during the year. The cap for expensing dwindles dollar for dollar (pro rata) above the $800,000, to the phase-out maximum of $1,050,000.

Some businesses will be able to use both the 50 percent depreciation and the capital expensing. Purchases such as large presses clearly will be limited because they will exceed the expensing cap, for one, and given the engineering and logistical aspects of ordering and installing a press, the only companies that will reap the accelerated depreciation are those companies that have already contracted with heavy equipment vendors.

However, it might be argued that printing companies weighing the purchase of equipment, large or small, may be swayed into action by the tax incentives offered in the package. Even a press ordered at Drupa 08 faces long odds of being installed by the end of the calendar year, but it stands to reason that manufacturers and suppliers will be keen on offering deals that would enable their customers to leverage the tax benefits.

Mark Nuzzaco, government affairs director at NPES The Association for Suppliers of Printing, Publishing and Converting Technologies, acknowledged that the “placed in service” stipulation forces printing businesses into making decisions on purchases in short order, and leaves large press acquisitions problematic for bonus/accelerated depreciation. Not that it can’t be done, however, but it will make for a challenge.

“We were hoping, when the package was put together, that we could extend the placed in service date into the first quarter of 2009,” he says. “It was all driven by revenue estimates that Congress was looking at in terms of what this package would cost. Even so, it’s certainly better than not having it.”
 

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