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Midsized manufacturers rate ITC top tax benefit.

If Congress and President Clinton consulted midsized businesses on tax policy, they would learn that restoring the investment tax credit (ITC) for new plant and equipment would benefit U.S. industry more than any other tax change, according to a survey last fall of 251 executives of industrial companies with annual sales of $10 million to $500 million. (The survey was conducted by Grant Thornton.)

When asked to rate possible tax policy changes on a scale of 1 to 5, with 1 offering little or no benefit and 5 offering great benefit, 92% of those surveyed rated the ITC's restoration either 4 or 5. Eighty-three percent and 64% of respondents gave such a rating to a reduction in the capital gains tax rate and to increased research and development tax incentives, respectively. Job creation tax breaks (60%) and estate tax reductions for family-owned business transfers (51%) were the only other policy changes to be rated 4 or 5 by more than half of the executives surveyed.

Edward T. Odmark, CPA, controller of Dry Storage Corp., a warehouser and distributor in Des Plaines, Illinois, believes a reduction in the capital gains tax rate currently offers the most benefit to industry because it would "encourage investments in business rather than in tax shelters." While he believes a restoration of the ITC would be beneficial, he thinks its impact would be lessened for many industries because of overcapacity.
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Title Annotation:investment tax credit
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Aug 1, 1993
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