Recent changes to the federal tax rules are encouraging manufacturers to install robots and hasten automation at U.S. factories in order to boost productivity in a tight labor market, The Wall Street Journal reports.
The revised tax code allows companies to immediately deduct the entire cost of equipment purchases from their taxable income for the next five years. Previously, companies were allowed to write off only a portion of the cost in a single year.
“We probably would have put it off another year” without the tax incentives, says Ken Mathas, president of Chicago-based Cornell Forge Co., which makes gears and other components for heavy machinery. Mathas plans to spend at least $1.5 million this year to add three or more robots to a production line in lieu of hiring workers he is struggling to find.
By effectively reducing the cost of automation, the tax overhaul puts “another arrow in the quiver of companies that want to go that route,” says Josh Pokrzywinski, an analyst at Wolfe Research.
