Tax Benefits May Spur Purchasing, Poll Shows

An e-mail poll conducted last month by Graphic Arts Monthly and TrendWatch Graphic Arts reveals that the Jobs & Growth Tax Relief Reconciliation Act of 2003 signed in May by President Bush may well motivate printers to purchase new equipment to gain the incentives.

The new law offers a $100,000-per-year capital investment expensing provision and a 50% "bonus" depreciation allowance. The law increases to $100,000 from $25,000 the amount that smaller businesses (those whose purchases do not exceed $400,000 in a given year) can expense before taking regular depreciation plus the additional 50% bonus depreciation, which is up from a 30% bonus provided in the economic stimulus package of 2002. Also covered in the bill is computer software.

The $100,000 expensing provision expires December 31, 2005, which means that the incentive can be applied to purchases in 2003, 2004, and 2005. To qualify for the 50% bonus depreciation, equipment or software must be purchased and installed by December 31, 2004.

In a key finding, while 40% of 273 poll respondents in printing companies said they were now in the market to buy new equipment, the figure jumped to 71% of respondents indicating that they would seriously consider buying new equipment to gain these incentives.

The poll, conducted via e-GAM, the magazine's weekly e-mail newsletter and now available at gammag.com and trendwatchgraphicarts.com, also surveyed vendor/supplier respondents. Both printer and supplier respondents were asked their awareness of the tax savings available to purchasers of capital goods. More survey respondents were aware of the tax law than not: 63% of printer respondents and 67% of vendor/supplier respondents said they were aware of the provisions.

While not very many vendor/supplier respondents reported that they were booking additional sales because customers were aware of the law, 70% of the vendor/supplier respondents said that, if they had more information on the law, they would use it to promote sales. Surprisingly, half of the vendor/supplier respondent group said they didn't know that their own company could take advantage of the bill's provisions.