Monday, January 1, 2018
Companies like Amazon and Wal-Mart have been attempting for years to integrate automation into their warehouses and brick-and-mortar stores to better mitigate the high cost of labor. The capital expenditures required for increasing automation can be incredibly expensive and are not always worth the outlay. Under the Tax Cuts and Jobs Act, companies can now immediately write off the cost of new equipment instead of being required to do it over an extended period of time. This provides some incentive to further automation efforts now while the deductions are still allowed. Corey Goodman, a partner specializing in tax at Cleary Gottlieb Steen & Hamilton, noted that if the “prices of equipment don’t change, you might see companies accelerate plans to buy equipment they were already thinking about buying.” With these sweeping changes in the tax code, retailers may intensify efforts at decreasing labor costs via automation, which may subvert the administration’s efforts at increasing available jobs.
See Lauren Hirsch, Why the New Tax Bill May Drive Retailers to Hire Less, Automate More, CNBC, December 28, 2017.