DORGAN INTRODUCES LEGISLATION TO ENCOURAGE BUSINESS INVESTMENTS IN THE ECONOMY

Senator says that targeted tax incentives will help businesses to create jobs rather than cutting them

Thursday, January 22, 2009

CONTACT: Justin Kitsch
or  Brenden Timpe
PHONE: 202-224-2551

(WASHINGTON, D.C.) --- U.S. Senator Byron Dorgan (D-ND) today introduced legislation, called the Main Street Recovery Act, to encourage businesses to create jobs and invest in the economy through a series of targeted tax incentives. Dorgan says with the nation’s economy suffering, his legislation will encourage businesses to make needed capital investments even during the economic downturn.

“We must be focused like a laser on creating new jobs in this country. Just as investments in our nation’s infrastructure will lead to more jobs and a stronger economy, encouraging businesses to make investments in their infrastructure will have the same impact,” said Dorgan. “My legislation will provide tax incentives to allow businesses to use this time to make investments – from purchasing machinery or upgrading equipment to making building improvements -- which in turn will create jobs for a multitude of industries, instead of eliminating them.”

Dorgan’s legislation includes the following tax incentives to stimulate business investment:

(1) A temporary 15-percent investment tax credit. To encourage manufacturers and producers not to wait on making crucial equipment and machinery purchases, an incentive is needed to make these purchases now or in the near future when these investments will most benefit the economy.

This can be accomplished by offering a temporary, 15-percent tax credit through June 30, 2010, for businesses that purchase new equipment and machinery that is used as an integral part of manufacturing or production. Investment tax credits have been proven to work and will help generate growth and jobs in the nation’s manufacturing and construction sectors.

(2) Enhanced 50-percent bonus depreciation. To promote business investment now, when the economy needs it most, Dorgan’s legislation will extend the expiring 50-percent bonus depreciation for eligible assets placed in service over the next 18 months. This will help businesses make capital investments during the economic downturn by allowing businesses to write off a larger share of their eligible business investments more quickly from their federal income taxes.

(3) Increased $250,000 small business expensing. To help small businesses buy the equipment and machinery they need to weather this economic storm and begin to grow again, the legislation will extend the expiring expensing provision that allows small businesses to expense, i.e. immediately deduct, up to $250,000 of their equipment and machinery purchases over the next year and a half.

In addition, there are many business owners that do not require new equipment or machinery but instead want to build a new business – maybe a restaurant, perhaps a retail shop, or make interior and other improvements to such properties. Expanding the bonus depreciation and small business expensing provisions outlined above to cover investments in commercial real property will help provide business owners with the financial assistance they need to build that building or make long overdue improvements.

“Senator Dorgan’s Main Street Recovery Act will encourage immediate investments in business assets, improve productivity, and spur economic recovery and growth,” said Philip Beram, Chief Tax Counsel and Executive Director of Tax Policy for the U.S. Chamber of Commerce. “Dorgan’s legislation will provide investment tax credits, enhanced cost recovery, and increased business expensing – all of which will help American businesses create jobs.”

“I am pleased to have the support of the U.S. Chamber of Commerce and the National Restaurant Association for these proposals as part of a robust economic stimulus package,” said Dorgan. “Businesses are the economic engine of this country, and we must do everything we can to keep them running and growing. This tax incentive package will create jobs instead of eliminating them, and I will work to have this legislation passed as quickly as possible.”

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