Tax Cut Good For VARs


New law lets small bsuinesses write off $100,000 in equipment


Industry trade groups say that the $350 billion tax cut President Bush signed into law last week is a boost for the channel.

"There is a big upside for VARs and resellers," said Bruce Hahn, director of U.S. public policy at CompTIA, an IT industry association based in Oakbrook

Terrace, Ill.

Small businesses can currently expense $25,000 per year in equipment and other supplies used to run their companies. Yet, under the new law, they will be able to write off $100,000 annually.


CompTIA's Bruce Hahn: New expense limit is 'huge selling tool for VARs.'

"The import of that is that one-third of what small businesses expense is IT equipment," Hahn said. "And small businesses [can have] up to 500 employees in many sectors."

The new expense limit "is a huge selling tool for the VARs that sell into the small- and midsize-business markets," Hahn said.

What's more, many solution providers are themselves small businesses that stand to gain from the higher write-off limit, Hahn said.

Vukan Ruzic, CEO of Profit Concepts International, a Long Beach, Calif.-based solution provider, said he "very much [sees] the benefit of the increased write-off" for his business, as well as for that of his clients.

Terry Neese, president of Women Impacting Public Policy, or WIPP, was among the individuals who met with the president on Tax Day last month in an effort to persuade him to sign the law.

"Lots of our members talk about upgrading their IT systems," said Neese. "Because technology changes so rapidly, if they don't upgrade every six months, they are really behind the eight ball."

WIPP represents the interests of some 430,000 women business owners in the United States. Some are micro-businesses, Neese said, while others employ hundreds of people and tally millions of dollars in annual revenue.