Kerry Tax Plan Will Help Massachusetts Businesses

Washington, DC - Today, Senator John Kerry introduced bipartisan legislation to modernize U.S. tax laws and simplify depreciation rules in order to help businesses -- especially small businesses and high tech companies -- keep up with emerging new technologies.

“Massachusetts has always been a leader in the high tech industry. We can't let dinosaur tax laws hold back our small businesses and start ups,” Kerry said. “These companies are job-creators, international innovators and a major source of pride and revenue for our state. We've got to be sure they have every tool it takes to stay at the forefront, and that means changing the current tax laws.”

"Senator Kerry has shown leadership in working with the employer community to create a plan that will simplify and modernize the federal tax depreciation system," said Massachusetts High Technology President Christopher Anderson. "While the pace of technology development continues to accelerate at a remarkable rate, the United States needs a nimble depreciation structure to help us compete with technology powers from across the globe. The passage of this bill will encourage businesses to invest more in technology, which will help grow the Massachusetts economy and create jobs."

Under current rules, technology used by businesses is assigned "class lives" that do not accurately reflect their economic or useful lives. For example, the depreciation life of a personal computer is 5 years while its economic value is only 2 to 3 years. The depreciation system in place was created before most businesses had email or websites. Senator Kerry’s bill will update the rules of an overly complex and outdated depreciation system, which will encourage capital investment and make it easier for small businesses to comply with tax laws.

Kerry’s legislation, the “Tax Depreciation, Modernization and Simplification Act of 2005,” lays out four proposals that would encourage the growth and competitiveness of businesses in Massachusetts:

Treasury Authority to Modify Class Lives
• The recovery periods, or "lives", used to calculate depreciation allowances have not been updated since 1986 and in some cases not since 1962. Since that time, new industries and technologies have developed and many assets are assigned depreciable lives that do not accurately reflect their economic or useful lives. For example, a personal computer has a depreciable life of five years - yet its economic life is only two to three years.

• In general, the bill would provide the Treasury Department with the authority, after consultation with Congress, to<