A new tax incentive passed by Congress in May is designed to help small-business owners buy capital equipment, and Laurie Paal, business banking manager for Wells Fargo in Minneapolis, is on a mission to spread the word.
A lack of business spending has been “the Achilles’ heel of the U.S. economy” during 2003, and a turnaround there will be essential to any positive change, said Wells Fargo’s Chief Economist Sung Won Sohn at a recent news conference in Minneapolis.
This year’s tax cut, however, may make investments in equipment and technology more attractive, Paal says. Small businesses can now expense as much as $100,000 of new equipment each year, a $75,000 increase from the previous level. In addition, they can receive a 50 percent bonus write-off for new equipment in its first year.
The new tax break has a “sunset” provision in 2005, so businesses should invest in new equipment within the next two years, Paal says. Several groups are lobbying to make the limits longstanding rather than temporary.
As of mid-summer, Paal hadn’t seen a big increase in demand for capital-equipment loans. “Right now we don’t think people are aware. That’s why we wanted to get this information out there to get them educated,” she says. “I think in the second half, as people are educated about this and the economy improves, we will see an uptick.”
Laurie Paal, Wells Fargo: 612.667.2750