In 2008, a bipartisan Congress tried to jumpstart an ailing economy by implementing an important pro-growth tax relief program known as accelerated expensing, or “bonus depreciation.” This makes it easier for companies to write off expenses more quickly than they had previously been able to – letting the company account for all or a share depreciation in the first year of a capital expenditure, rather than amortizing it over several years.
Fundamental tax reform that includes full business expensing remains a top priority. But for the here and now, this program has been a success. Congress has renewed it every two years—until this year.
We urge you to support the current legislation, H.R. 2510 introduced by Rep. Pat Tiberi (R-Ohio) and S 1660 introduced by Sen. Pat Roberts (R-Kansas), would make permanent the extension of accelerated expensing. This legislation is an important pillar of a pro-growth tax reform agenda that will create jobs and incent greater investment in infrastructure throughout our economy
Bonus depreciation encourages investment. Accelerated expensing gives businesses the certainty they need to spend money on capital expenditures in an uncertain economic environment. A recent study out of Harvard and the University of Chicago found that 50 percent expensing raises investment appreciably; sometimes up to 30 percent over a given time period. This makes sense: where normal depreciation schedules allow the company to depreciate the value of an investment over the course of the decade, this legislation allows companies to take that tax write off more quickly, reducing the stated value of the capital expenditure. By guaranteeing that companies can write off the value of an investment sooner, bonus depreciation legislation encourages companies to get those investments done quicker.
Bonus depreciation builds the economy and creates jobs. Capital investment contributes to economic growth both directly and indirectly. When companies spend money on capital purchases, they not only benefit the recipient of the sale; they also create jobs, stimulate local economies and unleash the power of the multiplier effect. That money goes not just to contractors involved in the project, but is also circulated throughout the local economy as those contractors hire local workers and subcontractors, who then spend that money on local goods and services, and the cycle continues.
Bonus depreciation moves toward fundamental tax reform. “Full business expensing” is a cornerstone of pro-growth tax reform. Bonus depreciation moves the current tax system more than halfway to full business expensing. Making bonus depreciation permanent would be a massive victory and big step forward towards meaningful tax reform that will help American businesses compete in the face of an increasingly difficult regulatory environment here at home, and the incredibly competitive global marketplace.
Growing our economy is the only way to create jobs, pay down the debt and ensure our nation’s long term financial security.
Permanently extending the benefits of bonus depreciation will encourage investment, build the economy and create jobs. We hope you support permanent extension. At the very least, it’s crucial to support S. 1666, the 2-year extension of the 50 percent expensing bill introduced by Sens. Debbie Stabenow (D-Mich.) and Pat Roberts, which will continue our nation's forward-looking policies that encourage investment in new jobs and equipment.Sincerely, David WilliamsPresidentTaxpayers Protection Alliance Seton MotleyPresidentLess Government Karen KerriganPresident & CEOSmall Business Entrepreneurship Council Jeff MazzellaPresidentCenter for Individual Freedom Andrew MoylanExecutive Director and Senior FellowR Street Institute Norm SingletonSenior Vice PresidentCampaign for Liberty
Brent GardnerVice President of Government AffairsAmericans for Prosperity Matthew KandrachVice President60 Plus Association Iain MurrayVice PresidentCompetitive Enterprise Institute Brandon ArnoldExecutive Vice PresidentNational Taxpayers Union Andrew LangerPresidentInstitute for Liberty Andresen BlomExecutive DirectorGrassroot Hawaii Action Gregory T. AngeloPresidentLog Cabin Republicans Mario LopezPresidentHispanic Leadership Fund George LandrithPresidentFrontiers of Freedom Thomas SchatzPresidentCouncil for Citizens Against Government Waste Matt SchlappChairmanAmerican Conservative Union Dan SchneiderExecutive DirectorAmerican Conservative Union