Relief for Textile Makers

As more and more production machinery inevitably becomes outdated, many companies limp on without replacing it because stringent tax depreciation laws make it difficult to get enough cash to modernize. Treasury Under Secretary Henry H. Fowler concedes that U.S. tax write-off allowances "are probably among the most limited in the world." Last week President Kennedy brought welcome relief to the textile industry--one of the most hampered by antiquated machines--by allowing it to concentrate its write-offs in as little as twelve years v. more than 25 years previously. Furthermore, said Kennedy, Treasury tax experts are studying the possibility of doing the same for all U.S. industries.

Fowler described the Administration's program as a two-pronged effort to encourage modernization: 1) depreciation reform, and 2) tax credit incentives to be granted for spending on new equipment. The tax credit proposed by the Administration last spring was denounced by industrialists for not making basic and badly needed reforms in depreciation.

"This fear should now be dissipated." said Fowler.

To the textile industry, quicker write-offs are money in the bank. A $15,000 spinning frame formerly charged off over 30 years at $500 a year will now be depreciated at $1,000 a year for 15 years. Hopefully, these increased tax savings will encourage textile men to buy such new machinery as a fully automated yarn mill now under development that cuts labor costs 40%. Textile men agree that the new write-offs will help mightily, but they are not fully satisfied yet. They vowed a further fight against the No. 1 problem--low-priced foreign imports--through a push for import controls.

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