Wanted: Faster Write-Offs

Businessmen have long agreed that the best way to encourage spending on new plant and equipment is faster tax write-offs on capital goods depreciation. The question for the U.S. Treasury is how to bring the present hodgepodge of depreciation tax rules (not fully revised since 1942) up to date. Last week businessmen themselves suggested a simple, sensible way: more than half of some 3,500 U.S. companies surveyed by the Treasury Department favored a free hand in using their own business judgment in determining the useful life of machinery for tax purposes.

At present, many a company benefits from the regulation that allows any profit on the sale of fully depreciated equipment to be taxed as a capital gain instead of at the higher income tax rate. A substantial majority of the firms queried by the Treasury, both big and small businesses, indicated they would readily forgo that windfall in return for more liberal depreciation allowances. They said that present tax laws assume too long a useful life for most machinery. They argued that if businessmen could set their own estimates, they would be more accurate, permit business to speed spending for new equipment and benefit the whole economy.

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