Introduction Of Retail Depreciaition Bill

Floor Speech

INTRODUCTION OF RETAIL DEPRECIATION BILL -- (Extensions of Remarks - June 29, 2007)

* Mr. NEAL of Massachusetts. Madam Speaker, I rise today to introduce legislation to help our nation's 1.5 million retailers. The bill that I am filing today, along with my Committee colleagues Representatives PHIL ENGLISH, ARTUR DAVIS, and SAM JOHNSON, would provide a quicker cost recovery for improvements to retail-owned property.

* Already, retailers or other commercial entities that rent, rather than own their property can recover the costs of improvements over 15 years. Owners of retail property, however, must write-off these same improvements to their property over 39 years. There is little reason for such a distinction; the wear and tear on the property is the same. In fact, studies by the Congressional Research Service, the Treasury Department, and other private economists have found that the current asset lives assigned to buildings and improvements are far too long.

* Many small retailers own their buildings and are unable to afford the space in the more desirable malls. One of my constituents, Dave Ratner of Dave's Soda and Pet City in Agawam, MA, testified before Congress earlier this year on this issue. Dave employs 86 people in western Massachusetts at his four locations. He competes with the major pet care chain stores, which often lease pricey space in the malls. Because their property is leased, it is eligible for the quicker cost recovery, providing a significant tax advantage over Dave's shops.

* Since half of retail spaced is owned and half is rented, Congress should try to create parity within this industry. Our retailers employ one in five American workers and generally must remodel their stores every five to seven years in order to keep up with customers' tastes and needs. These retail owners, the majority of whom have less than five employees, are often all you see along Main Street in the small cities and especially in rural areas. Ownership signifies a long-term commitment to the community. We should at least level the playing field for these community-based businesses.

* We urge you to join us in supporting legislation to allow a quicker cost recovery for improvements to retail-owned property. It is one
way to help retailers remain competitive and stay on Main Street.

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