How Full Expensing Goes Beyond the ‘Bottom Line’  

Jake Jacoby from the Truck Rental and Leasing Association (TRALA) shares how full expensing benefits their members, customers and the broader economy  

Jake Jacoby is the president and CEO of the Truck Renting and Leasing Association (TRALA), a national trade association that represents small and major truck and leasing companies in North America. Its membership includes 475 trucking companies of all sizes that own anywhere from 20 trucks to several thousand trucks, and includes roughly 100 supplier members who manufacture engines, tires and other equipment that trucks rely on.  

The vast majority of TRALA’s members are family-owned and 80% of their customers are small business. With trucks becoming more expensive and complicated to maintain, many businesses — ranging from bakeries and florists — chose to lease a vehicle instead of purchasing one. 

Full expensing makes it possible for trucking companies to continuously reinvest in their fleet and offer the best models to their customers. We talked with Jake about the importance of the policy to truck companies and their customers.  

Q: What types of companies do you rent and lease to? 

JJ: More than 80% of our customers are small businesses. Since vehicles are becoming more expensive and complicated to maintain, most of our customers would rather lease a truck for 4 or 5 years instead of owning one. Amazon, UPS or FedEx will rent vehicles when they have overflows around Christmas, but most of our companies are small businesses. 

Q: What does full expensing mean for your members?   

JJ: We're able to purchase more if we have full expensing. Being able to write off the full cost of vehicles allows our members to have more tax revenue at the end of the year. Then, they’re hiring more people, buying more vehicles — it's a huge growth. 

Full expensing started at 100 percent, and now it’s dropping down. That has an impact on how many vehicles a smaller- and mid-range truck leasing company can purchase, which has a direct relationship to the manufacturer making more money because we're buying more vehicles. Our customers are happier, too, because the vehicles are newer. Nobody wants to lease a used truck.  

If we don't have full expensing, we're not going to buy as many vehicles and our customers aren't going to have as many vehicles to rent and lease. It's going to hurt not just our bottom line, but also our customers’ ability to get a newer vehicle to lease. It has a trickle-down effect across the board.  

Q: How does this affect your members?  

JJ: Having a scarcity of newer vehicles hurts them significantly. There’s a demand and requirement for having new vehicles. If we're not able to write off with full expensing on our final tax bill, then our members won’t make enough money to offer the rate that their customers are used to.   

Most of the trucking industry’s margins are very small. You get to a point where you have to raise rates. We don't live in a vacuum. Not being able to use full expensing as a tax measure impacts our members’ ability to hire more workers and give higher raises to those workers and maintain their business, especially right now with 5% inflation and high costs of living.  

Q: Can you share more about how inflation connects to full expensing? 

JJ: If you have higher inflation, it erodes the truck's value. Depending on how bad the inflation is, the value of your tax deduction falls based on the dollar. The higher the inflation, then the greater the impact is on the value of vehicles in the secondary market.  

For example, if we lease a truck to a customer for five years, when it’s over, we sell the truck on the secondary market. If you’ve had to write off the truck over several years to the value based on how much you spent on it, it’s now worth less, and that has a significant impact on our members’ bottom line.  

Q: How does full expensing play a role in the competitiveness of your industry?  

JJ: It's difficult when we have companies trying to compete in a global economy. When all the competitive countries out there, such as China, can write-off expenses and we can’t, it puts us at a disadvantage.