The Ottawa Herald from Ottawa, Kansas on October 17, 1961 · Page 12
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The Ottawa Herald from Ottawa, Kansas · Page 12

Ottawa, Kansas
Issue Date:
Tuesday, October 17, 1961
Page 12
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Industry Gets A Tax Break By SAM DAWSON • AP Business News Analyst NEW YORK (AP)-The Kennedy administration and business are getting closer together today on at least one disputed issue: Tax allowances for the wear and tear on machines and plants. The President has been urging speedier modernization of industry to promote economic .growth. Industry has been charging it is held back by obsolete tax rules. The Treasury. now indicates it will be more liberal—as many businessmen have been asking—in allowing quicker depreciation writeoffs for tax purposes. It has taken the first step by cutting the writeoff time for many kinds of textile machinery to as low as 15 years from the previous 25 years. It is studying other industries burdened with plants and machinery made obsolete in recent years by the big speedup in technology, In return for this promised shortening of depreciation time schedules where found justified, business leaders indicate they'll look with more favor on a Kennedy administration pet scheme: A tax allowance as a reward for the purchase of new equipment. At first the President proposed a sliding scale giving the biggest tax allowance to firms making unusually heavy investments. This was changed by the House Ways & Means Committee to a flat reduction of 8 per cent of the equip- ment cost. The modified bill, which Treasury officials indicate the administration will accept, is docketed for first order of committee business in the new session in January. But businessmen aren't primarily interested in this untried device. What they have sought is an updating of the depreciation rules, last revised in 1942. Today they are cheered, by the concession to the textile industry and the assurance of Henry F. Fowler, undersecretary of the Treasury, that other industries are being studied. This is how the shorter depreciation time works: If a company must write off a million-dollar equipment purchase over 25 years, it can take a depreciation allowance for tax purposes of $40,000 a year. But if it can write off the cost in 15 years, it can deduct about $67,000 a year. With the corporate income tax rate at 52 per cent, this difference of $27,000 means that the company has about $13,500 more cash available each year. The U.S. Treasury would get less taxes during the faster, write- off period. But business spokesmen argue that shorter or longer schedules work out in the long run to the same total payments, as- suming the machinery is in use throughout the allowed depreciation period. Businessmen also contend that today machinery becomes obsolete much faster than in calmer eras when the tax rules were made. A number of industries have told Congress they are stuck with obsolete machinery valued for tax purposes at the original price but which can't be replaced at even twice that cost. Steel made a point of this in its dispute with President Kennedy over prices, saying earnings must rise to pay for costlier plants. Railroads bemoan the lack of tax aids in replacing their obsolete equipment. Other U.S. industrialists note that most other nations permit faster writeoffs and that many grant other tax incentives in the year of a new purchase. American companies complain that their old plants can't compete with the modern ones recently built in western Europe and Japan. File Unfair Labor Suit KANSAS CITY (AP)-A claim of unfair labor practices against 17 THE OTTAWA HERALD •* Tuesday, October 17, 1961 LFM Manufacturing Co. of AtrfK ison, Kan., was filed with the National Labor Relations Board Mow day by Local 4038 of the United Steel Workers Union, • The union, which.has been an. strike at the plant since Oct. 9, charged the company would not bargain in good faith. In Atchison, District Judge Ed« mond L. Page granted a tempo-' rary injunction Monday against mass picketing at the LFM plant at the request of the company. A hearing on the temporary order was set for-Oct. 25. CELEBRATING 30 Years In Ottawa DURING OCTOBER GAMBLE COUPON Bennett's Forest Park if) BUTTER Limit One Pound With Coupon with coupon ^S, o 9 !) *! s) ^™ ^ <ir II? And Our Lowest Price with Our Lowest Price in 30 YEARS on a 21 Cubic Foot Freezer Regular 284.95 1962 Model N O W $ 249 50 or pay 3.00 wk. EVER! NO CASH DOWN 1. 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