U.S. Corporate Capital Expenditures: Consciously Uncoupled From Federal Tax Incentives

How are businesses responding to this recent tax policy change?

U.S. firms outside of the finance industry held more than $1.64 trillion in cash reserves at the end of 2013. This historic high represents an increase of twelve percent compared to the year before. With such large cash piles sitting on corporate balance sheets and an improving economy, analysts deemed 2014 to be the start of a corporate spending spree.

Yet 2013 also marked the end of bonus depreciation – an important tax incentive intended to spur business investment. During a time of economic growth, how are businesses responding to this recent tax policy change?

To answer this question, Bloomberg BNA surveyed 100 tax and accounting leaders from U.S. businesses with average revenues of $7.5 billion. The aim of the survey was to examine how corporate capital investments have changed since the 2008 recession and how new tax policies have influenced financial decision-making at large firms.

Among the key findings of the survey are that:


  • Fifty-five percent of respondents report that their organizations' capital expenditures have increased since the recession;
  • Thirty percent of respondents feel that the current tax policy climate stifles their firms' willingness to make capital expenditures; and
  • More than half of respondents believe that their firms' capital expenditures would not increase, even if available tax breaks reduced their total cost of capital by ten percent.

During this Webcast, we will discuss the implications of these findings, as well as: 

  • How U.S. firms' investments have changed in the post-recession years;
  • The impact of recent tax-break expirations, such as bonus depreciation, on corporate capital investment strategy; and
  • What CFOs need to know about mitigating risks of depreciation errors that are likely to concern both internal and external auditors.

About the Speaker

Joe Fleischer

Webcast Producer with CFO Publishing

CFO

Joe Fleischer's LinkedIn page

CFO.com offers daily stories geared specifically for finance executives. Coverage includes original reporting on new accounting standards, recent capital-raisings, risk management, and professional career development. The site also features proprietary benchmarking tools and calculators, plus a full set of related directories, special reports, and buyer’s guides. In addition, CFO.com provides complete online editions of CFO magazine.
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