Three Tax Reforms to Encourage Modernization of the Manufacturing Sector

Much of the equipment and production processes in America’s factories are decades old and not as efficient as modern equipment and processes in use by many of our international competitors. While some factories have been modernized, many have not. Modernizing these factories will allow them to better compete in world markets by improving product quality and reducing product costs, including savings through reduced energy use. Modernization of our factories will build on several competitive advantages the U.S. now has—-low electric and natural gas prices (relative to the rest of the world) and lower labor costs due to higher productivity.

As we emerge from the Great Recession, many industrial firms have capital to invest, but a nudge from the tax code could spur substantial additional investments here in the U.S. We suggest three possible tax policies that could spur investment in a new ACEEE working paper. The paper recognizes that any incentives need to be low cost because of concerns about the federal budget deficit and a desire by many tax reform proponents to reduce tax rates by reducing tax expenditures…

To read the working paper visit: http://aceee.org/white-paper/encouraging-modernization.

To continue reading the blog post summarizing the paper visit: http://aceee.org/blog/2012/12/three-tax-reforms-encourage-moderniza.

Source: American Council for an Energy-Efficient Economy: aceee.org.

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