Tina Smith: “our economy has changed dramatically in recent years as a result of the development of new technologies and industries.…”

“our economy has changed dramatically in recent years as a result of the development of new technologies and industries. However, we have not updated our tax depreciation system to reflect these advancements. In fact, the recovery periods used to calculate depreciation allowances have not been adjusted since 1986-- and in some cases not since 1962. For example, a personal computer has a depreciable life of 5 years even though its economic life is only 2 to 3 years. Today, I am introducing legislation that will respond to these changes by modernizing and simplifying the tax depreciation rules. Senator Kerry has joined me in introducing the Tax Depreciation, Modernization and Simplification Act of 2005, which will encourage capital investment and make it easier for companies to comply with the tax law. This legislation will allow the Treasury Department, in consultation with Congress, to modify and create new class lives for capital assets. Any new classification created by the Treasury Department must reflect the anticipated useful life and decline in value over time of the asset. In addition, it should take into account when the asset is technologically or functionally obsolete for its original purpose. With this new regulatory authority, Treasury will be able to develop class lives that are more in line with assets' economic lives. Another provision in this legislation deals with the mid-quarter convention.…”