The Wood Machinery Manufacturers of America is urging its members to support a proposal before Congress to create a tax-free savings program for manufacturers that is similar to an individual retirement account.
Connecticut legislators have introduced separate bills in the U.S. House of Representatives and in the Senate to establish the Manufacturing Reinvestment Account Act. The act would allow manufacturers to save pretax dollars to invest in plant, equipment, job training or workforce development. Much like an IRA, funds would build up tax free, according to the WMMA.
With an MRA, the WMMA says manufacturers could make annual contributions up to $500,000 over a period of seven years. If a manufacturer contributes $500,000 annually and the account earns interest at 5 percent, with a 15 percent tax rate on amounts distributed from the MRA, after seven years the manufacturer would have approximately $3.6 million to reinvest in his or her business.
“Many woodworking companies are ‘S’ corporations and can take advantage of this bill,” said Jamison Scott, WMMA treasurer and executive vice president of Air Handling Systems Inc. in Woodbridge, Conn. “Putting the Manufacturing Reinvestment Account Act into effect is one of the top three issues the WMMA board has identified for members to focus on this year.”
For information, visit www.wmma.org.