Senator Orrin Hatch, R-UT, a member of the Senate Finance Committee, has introduced legislation that would provide a temporary 50% bonus depreciation deduction for all businesses that purchase fixed assets during the period between September 11, 2001, and July 1, 2002.
The Economic Stimulus Through Bonus Depreciation Act of 2001, Senate bill 1553, offers businesses the 50% first-year bonus depreciation in addition to the normal depreciation deduction, computed as if the bonus depreciation did not exist. The bonus depreciation would apply to purchases of real estate and leasehold improvements in addition to other fixed assets.
The House Ways & Means Committee has approved a tax bill that includes a 30% bonus depreciation incentive, however, the House bonus depreciation provision would not apply to leasehold improvements.
The Senate version of the bonus depreciation bill, "would provide businesses throughout America a very strong, but short-term incentive to purchase business assets and put them to work over the next few months," Senator Hatch said. "A strong and concentrated surge in capital spending by U.S. businesses would provide a tremendous shot in the arm to our economy, as present inventories become depleted and manufacturers scramble to keep up with the new demand."
The full Senate is expected to consider the bill in two to three weeks, and the House is expected to consider its tax legislation yet this week.