Chain of Thought

When Both Incentives and Disincentives are Good News

On a day when the U.S. Government issued a major disincentive to terrorists everywhere by announcing the deletion of Osama bin Laden as an asset, I thought I'd brighten your day a bit more with news of some business incentives coming out of Washington, DC.

In my last blog, I told you about the efforts of Congressman Paul Tonko, a Democrat representing the 21st District of New York, and Congressman Chris Gibson, a Republican representing New York's 20th district, to simplify and improve the tax credit for fuel cell-powered industrial vehicles. They want to boost new investments in clean technology and create thousands of jobs.

That's just one of many new efforts to make government more business friendly. For example, on the propane side of the lift truck aisle, the 50 cent per gallon tax credit for propane used in lift trucks has been extended. In fact, not only can you take that tax credit for 2011, but you have until August of 2011 to claim one-time your fuel use for 2010.

But material handlers can also look outside their lift trucks for tax relief. Two new U.S. tax incentives, the 2010 Tax Relief Act and the Small Business Jobs Act, reduce the cost of implementing new automatic identification systems that manage bar code scanning, labeling, and sortation. According to Pratap Chakravarthy, director of marketing at Accu-Sort, thanks to the 2010 Tax Relief Act and the Small Business Jobs Act, Accelerated Bonus Depreciation allows companies realize tax savings almost immediately instead of amortizing it over many years. And companies or investments that do not qualify for the Accelerated Bonus Depreciation may still qualify for an immediate write-off through the Small Business Jobs Act. This incentive allows qualifying companies to expense equipment immediately.

Even technology suppliers are in a better position to benefit from tax incentives—just by doing what they're supposed to be doing anyway, and that is improving their product offerings. There's an effort to make the R&D tax credit permanent. Called the Research & Experimentation Tax Credit, it has been renewed 14 times, most recently when President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 in December.

Congress intends the credit to reward companies for incurring expenses in the development of new and improved products and processes. Both political parties, as well as many business interests, are working to make the credit permanent.

According to a White House fact sheet, the R&D tax credit directly supports jobs in the United States as well as U.S.-based investment. President Obama wants to expand the credit by about 20 percent and to simplify it to attract more companies to take advantage of it.

As today's headlines prove, there's a lot to be said for taking your best shot when an opportunity presents itself.

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