Proposed Tax Code Changes- What it Would Mean to Businesses

According to the WSJ, tax-reform plans proposed by President Obama's deficit-cutting commission would radically change corporate tax policy and, business groups say, could improve U.S. competitiveness in global trade. The proposed changes could also create winners and losers among U.S. companies.
Business groups and economists have long sought fundamental changes to the tax code, which hasn't been overhauled since 1986.

Although we may be in need of a tax overhaul, how do we decide on the right one?  Small businesses drive this countries economy, creating new jobs and opportunities.  Taxes have become so complex and convoluted, it seems there is no light at the end of the tunnel. So how can we in theory create beneficial tax laws that still support business and entrepreneurs? Are these proposals a major step forward, or just additional red tape to the never ending tax code?

Here are the proposed plans-

Option 1, called The Zero Plan, would impose a rate of 26% to 28%, down from the current 35%. In return, it would eliminate all or most "tax expenditures," or provisions such as capital gains or tax credits that lower a company's tax bills.

Option 3, called the Tax Reform Trigger, merely says that if Congress hasn't cut the deficit by 2013, then companies would be subject to a 15% reduction in all general business-tax credits.
Option 2 is more detailed, and is based on a proposal by Sen. Ron Wyden (D., Ore.) and Sen. Judd Gregg (R., N.H.). In return for a 26% tax rate and a permanent extension of the temporary research-and-development tax credit, it would eliminate certain popular deductions, including one for domestic manufacturing. It also would cut various oil-and-gas tax breaks, and modify depreciation, a tax treatment that often provides companies with tax-minimizing deductions soon after property or equipment is acquired.

Perhaps most important, Option 2, and variants of Option 1, would shift the U.S. to a "territorial" tax on corporate income, a change business groups have endorsed. The current system taxes foreign corporate earnings at the U.S. rate only when they are repatriated, which might encourage U.S. multinationals to keep profits offshore.

We believe in the power of business and how it fuels the economy.  This should be interesting given the job growth in our country is due to small business.  We will definitely keep our ears to the ground on this.

Mazuma Capital

U.S. Farm Tractor, Combine Retail Sales Surge in October

According to the Association of Equipment Manufacturers, total U.S. farm tractor unit retail sales were up 20.3% to 14,648 in October from 12,177 in the same month in 2009. Larger, more powerful four-wheel tractors surged in October, with unit sales up almost 83% compared to last year.

For the year, this segment of the farm machinery market was up 26.9%. Year-to-date farm tractor sales through October were up 4.1% compared to the first 10 months one year ago.

Combine unit retail sales were up from 895 in October 2009 to 1,112 units this year or 24.2%. Year-to-date combine sales increased from 8,342 last year to 8,816 in the current period or 5.7%.

Deere & Company notes in its most recent farm machinery outlook that with support from healthy farm cash receipts, solid commodity prices and low interest rates, industry farm-machinery sales in the United States and Canada are forecast to be up 5 to 10% for the year with much of the strength concentrated in larger equipment.

Thursday, November 11, 2010
Source: Monitor Daily

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September Machine Tool Consumption Up 157% Over ’09

September’s machine tool consumption totaled $339.76 million, up 156.8% compared with the total of $155.69 million for the same month in 2009. That puts the year-to-date total at $2,090.27 million, up 74.1% compared with the same YTD figures in 2009.
This comes from the U.S. Manufacturing Technology Consumption Report is compiled by the American Tool Distributors’ Association and The Association for Manufacturing Technology.
“September 2010 was a watershed in the recovery from the recession of 2008-2009,” said Peter Borden, AMTDA President. “The 1,992 units sold (in September) is the highest number since September of 2008 and demonstrates the resilience and staying power of the U.S. manufacturing base. More remarkably, this was done while many factories are running below the capacity levels that require capital goods purchases, despite the tight credit, and in spite of questions about government debt and potential tax increases. The catalysts of the successful IMTS, the weaker dollar, and the passage of bonus depreciation paid surprising and long awaited dividends.”
By region, Northeast consumption stood at $64.44 million, 66.3% higher than August’s $38.76 million and 77.4% higher that the September 2009 total. A year-to-date total of $362.73 million was 53.4% more than the same figure for 2009.
The Southern Region’s manufacturing technology consumption totaled $66.85 million, up 119.9% when compared with the $30.4 million total for August and up 389.4% when compared with September a year ago, the report noted.
For the Midwest, consumption was 49% more than August’s $81.75 million and up 157.6% when compared with last September. The $629.19 million 2010 YTD total was 84.4% above the 2009 total at the same time.
The Central Region saw manufacturing technology consumption climb to $114.99 million, 77.0% more than the August total, and 238.3% higher than the total for September 2009. With a YTD total of $561.03 million, 2010 was up 94.0% compared to the same period in 2009.
The Western Region also saw an increase in consumption, with a total of $31.68 million in September (up 27.5%), compared to August’s $24.84 million. At $228.66 million, 2010 YTD was 36% higher than the comparable figure a year ago.

ELFF Study: Changes to Lease Accounting

Proposed changes to lease accounting rules will significantly impact the balance sheets and operations of companies that use lease financing (lessees) and providers of lease financing (lessors), according to a new study from the Equipment Leasing & Finance Foundation.
The study, “Changes to Lease Accounting: Rules, Reactions and Realities,” is designed to help users understand the proposed changes, recognize the market impact of the changes, and identify the challenges and opportunities they represent.
The lease accounting proposal was released by the International Accounting Standards Board and the Financial Accounting Standards Board in August, and a final rule is expected in 2011. Although the proposal is intended to standardize the lease accounting process, it is expected to add significant complexity and processes to both lessor and lessee accounting.
The Foundation’s study examines how the changes are expected to:
• Affect customers’ propensity to lease
• Alter the attractiveness of lease financing
• Modify customers’ approach to lease transactions
• Change how lessors develop and market financial products
• Impact lessor and lessee business processes and related portfolio management systems
• Influence lessor business models and ownership structures
• Affect equipment leasing and finance providers’ decisions to remain in the market or encourage new entrants to replace them
“While the full impact of the lease accounting changes on the equipment leasing and finance industry is still unknown, both lessees and lessors are advised to take action now,” said Edward Dahlka, chairman of the Foundation and President of Assurance Asset Finance. “First, submit a comment letter to the FASB and IASB that provides your company’s views on the changes. Second, use the Foundation’s new study to develop a plan of action so you’ll be ready for the impending changes.”
To read the executive summary of “Changes to Lease Accounting: Rules, Reactions and Realities” the full report can be purchased here http://www.leasefoundation.org/IndRsrcs/MO/FASB.htm.
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that provides vision for the equipment leasing and finance industry through future-focused information and research. Primarily funded through donations, the Foundation is the only organization dedicated to future-oriented, in-depth, independent research for the leasing industry. Visit the Foundation online at http://www.leasefoundation.org/.

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GOP Fights to Extend Bush Era Tax Cuts

Newly empowered Republicans pushed to extend Bush-era tax levels and pledged significant cuts in spending, as Obama sought to maintain his footing in an escalating budget battle. Jerry Seib discusses.

http://online.wsj.com/video/gop-fights-to-extend-bush-tax-cuts-for-years/53C3A451-18D3-4856-9AB7-C6F6FFA2ADA9.html