ELFA Equipment Leasing & Finance -Nov/Dec 2012 : Page 40

FEDERaL insight By Andy Fishburn gearing up for tax Reform ELFA Board Approves Policy Statement on Comprehensive Tax Reform o n ocT. 20 , the ELFA Board approved a policy statement on comprehensive federal tax reform. This policy statement was coordinated through the ELFA Federal Tax Committee, and I’d like to thank all the members of the committee for their input, and especially thank Committee Chairman Mitchell Menaker for his work during the drafting process. Starting early in 2013, it is widely expected that Congress will consider tax reform, and ELFA has issued our policy statement now so that we will have an established policy position against which to measure the various proposals that will come from all cor-ners of Capitol Hill next year. The overarching theme of the policy statement is that ELFA supports the maintenance of the longstanding prin-ciple in the U.S. income tax system— that income is taxed, and business income is broadly defined as revenues less expenses. While this may seem to be a simple concept, the debate over tax reform will ultimately come down to what qualifies as expenses and what behaviors are so critically important to the national good that they should be incentivized in the tax code. As ELFA members know, there are many reasons why a company would choose to lease or finance equipment rather than purchase the equipment outright—these range from managing cash flow to protecting the lessee from equipment obsolescence. In order to maintain businesses’ access to these important tools, the ELFA tax-reform policy statement emphasizes why it is important to treat equipment owner-lessors and owner-operators in a tax-neutral manner and establishes ELFA’s position on the following three provi-sions critical to the leasing industry: 1. Maintaining the ability of busi-nesses to deduct interest, a long-standing provision in the tax code that allows businesses to efficiently finance large capital investments; 40 NOVEMBER/DECEMBER 2012 Equipm Ent LEasing & Financ E magazinE The overarching theme of the policy statement is that ELFA supports the maintenance of the longstanding principle in the U.S. income tax system— that income is taxed, and business income is broadly defined as revenues less expenses. 2. Supporting proposals that maintain the ability of businesses to count leasing expenses against revenue when they are calculating their in-come subject to tax; and 3. Preserving the ability of businesses to depreciate assets over time and ensure that depreciations can be utilized by both sides of lease and finance transactions. In addition to these central points, the policy statement also ● ● Shows why the tax-exempt treat-ment of state and local government obligations is important not only to our industry but also to state and lo-cal governments and their ability to meet their capital needs. l Discusses how ELFA will support tax reform that moves our nation’s corpo-rate tax structure toward a territorial system and maintains the Active Fi-nancing Exemption to Subpart F. Last, the policy statement talks about the importance of simplicity and fairness in the tax code so that all Americans have faith in their tax system. The full policy statement can be on found on the ELFA website, www. elfaonline.org/Advocacy/FED. ■ For more information, please contact Andy Fishburn , ELFA Vice President of Federal Government Relations, at afishburn@ elfaonline.org. shutterstock

Federal Insight: Gearing Up For Tax Reform

Andy Fishburn

ELFA Board Approves Policy Statement on Comprehensive Tax Reform<br /> <br /> ON OCT. 20, the ELFA Board approved a policy statement on comprehensive federal tax reform. This policy statement was coordinated through the ELFA Federal Tax Committee, and I’d like to thank all the members of the committee for their input, and especially thank Committee Chairman Mitchell Menaker for his work during the drafting process.<br /> <br /> Starting early in 2013, it is widely expected that Congress will consider tax reform, and ELFA has issued our policy statement now so that we will have an established policy position against which to measure the various proposals that will come from all corners of Capitol Hill next year. <br /> <br /> The overarching theme of the policy statement is that ELFA supports the maintenance of the longstanding principle in the U.S. income tax system—that income is taxed, and business income is broadly defined as revenues less expenses. While this may seem to be a simple concept, the debate over tax reform will ultimately come down to what qualifies as expenses and what behaviors are so critically important to the national good that they should be incentivized in the tax code. <br /> <br /> As ELFA members know, there are many reasons why a company would choose to lease or finance equipment rather than purchase the equipment outright—these range from managing cash flow to protecting the lessee from equipment obsolescence. In order to maintain businesses’ access to these important tools, the ELFA tax-reform policy statement emphasizes why it is important to treat equipment owner-lessors and owner-operators in a tax-neutral manner and establishes ELFA’s position on the following three provisions critical to the leasing industry:<br /> <br /> 1. Maintaining the ability of businesses to deduct interest, a long-standing provision in the tax code that allows businesses to efficiently finance large capital investments; <br /> <br /> 2. Supporting proposals that maintain the ability of businesses to count leasing expenses against revenue when they are calculating their income subject to tax; and<br /> <br /> 3. Preserving the ability of businesses to depreciate assets over time and ensure that depreciations can be utilized by both sides of lease and finance transactions. <br /> <br /> In addition to these central points, the policy statement also<br /> <br /> * Shows why the tax-exempt treatment of state and local government obligations is important not only to our industry but also to state and local governments and their ability to meet their capital needs. <br /> <br /> * Discusses how ELFA will support tax reform that moves our nation’s corporate tax structure toward a territorial system and maintains the Active Financing Exemption to Subpart F.<br /> <br /> Last, the policy statement talks about the importance of simplicity and fairness in the tax code so that all Americans have faith in their tax system.<br /> <br /> The full policy statement can be on found on the ELFA website, www.<br /> elfaonline.org/Advocacy/FED.<br /> <br /> For more information, please contact Andy Fishburn, ELFA Vice President of Federal Government Relations, at afishburn@elfaonline.org.<br />  <br />

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