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TIBERI BILL WOULD GIVE CERTAINTY TO EMPLOYERS PROVIDING OPPORTUNITY FOR GROWTH
U.S. Congressman Pat Tiberi (R-OH), a member of the House Ways and Means Committee, today introduced a bill, H.R. 2510 that would provide certainty for employers, offering the opportunity for economic growth, job creation, and wage increases.
Congressman Tiberi’s bill would help employers better access capital, invest in new facilities and create American jobs by allowing businesses to immediately deduct half the cost of new equipment purchases and qualified improvement property rather than waiting for years to depreciate the cost. This bill would also lift some restrictions to allow certain tax credits to be used for capital reinvestment and would ensure more companies would be able to take advantage of the immediate deduction, also known as bonus depreciation.
“This is about providing the opportunity for employers to grow their businesses and hire more workers by providing certainty in the tax code,” said Congressman Tiberi. “Time and again Ohio employers have told me that the ability to immediately deduct half the cost of qualified purchases frees up more money to invest in their businesses. It only makes sense that making this deduction permanent allows employers to effectively plan for their future needs and incentivizes them to grow and create jobs.”
Specifically, the bill:
· Permanently Extends 50 percent Bonus Depreciation. Businesses will be able to deduct 50 percent of qualified purchased property immediately. Bonus depreciation was first enacted in 2002, and since then has been increased, extended and allowed to expire multiple times. By making this provision permanent, businesses will have the certainty needed to increase domestic investment, raise wages, and hire more people.
· Lifts Restrictions to Allow For More Corporate Alternative Minimum Tax Credits To Be Used for Capital Reinvestment. The recent economic situation caused many companies to operate at a loss, hampering their ability to take advantage of bonus depreciation. From April 1, 2008 through 2014 businesses had the option to forego bonus depreciation and instead claim some of their unused Corporate Alternative Minimum Tax credits. The bill would allow for more of these credits – which are essentially overpaid taxes – to be used for capital investment.
· Expands Definition of Qualifying Property to Include Retail and Restaurant Improvements. Retailers often renovate the interiors of their stores on a frequent basis. While bonus depreciation has traditionally applied to retailers and restaurants that lease their stores, owner-occupied retail stores and restaurants have been ineligible for bonus depreciation. By allowing bonus depreciation on all retail and restaurant improvements, the bill corrects this inequity.
The non-partisan Tax Foundation has reported that making bonus depreciation permanent would support the creation of 212,000 new jobs, increase federal revenue by $23 billion per year, and grow the economy by one percent.
The Heritage Foundation has said that “Bonus depreciation – better called 50 percent expensing – reduces the tax bias against investment,” and that making it permanent “would be a major step toward true tax reform.”
Meanwhile, the National Retail Federation says bonus depreciation provides an important investment incentive that “will help spur our sluggish economy.” Retail is the nation’s largest private sector employer, supporting one in four American jobs.
Congressman Tiberi introduced a similar measure during the 113th Congress. It passed the House by a vote on 258-160 in July of 2014; however, it was not considered in the Democrat-controlled Senate. The bill also passed the House as part of a larger tax reform package, the Jobs for America Act, which included 15 bills to help grow the economy. It passed the House in September 2014 but the larger measure failed to pass the Senate.