John McCoy, of Orthman Manufacturing Inc. and President of the Farm Equipment Manufacturers Association, said the Association is among the many agricultural groups urging the Ways & Means House Committee to make permanent the five-year depreciation schedule for agriculture equipment.
Last year, in the Renewable Energy and Job Creation Act of 2008, Congress wisely and appropriately changed the schedule from seven to five years. However, the modified depreciation schedule and all of the benefits it provided to U.S. agriculture and manufacturing expired at the end of 2009. A one-year extension of this important provision is included in the “extenders” package the Farm Equipment Manufacturers Association along with other groups has asked the Committee to support.
This Association believes that in these challenging economic times a change in depreciable life from seven to five years is critical. The American Farm Bureau Federation’s economist estimates it would add $850 million to farm income in a typical year within the five-year depreciation schedule, as well as supporting demand for the agricultural equipment industry, which adds over $82 billion in gross domestic product to the U.S. economy and supports nearly 250,000 jobs in all 50 states.
Furthermore, the environment stands to benefit by giving farmers and ranchers incentive to purchase new, more efficient equipment with lower emissions. Lastly, the five-year schedule for agricultural equipment adds consistency and fairness to the tax code because construction equipment, which has similar use patterns and lifespan, already has a five-year schedule.