House Passes Bonus Depreciation Bill

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The Republican-controlled House of Representatives passed a bill on Friday morning that would permanently extend the bonus depreciation tax break for businesses.

The measure, HR 4718, which was crafted by Representative Pat Tiberi (R-OH), was approved by a 258-to-160 vote. Thirty-four Democrats voted for the legislation, while two Republican lawmakers voted against it.

Representative Richard Neal (D-MA) pitched a proposal before the final vote to recommit with instructions to the House Ways and Means Committee, which would have required the bill to be reported back to the House with an amendment to extend bonus depreciation for two additional years instead of permanently. That proposal was struck down by a vote of 191 to 229.

Under HR 4718, businesses would be able to claim an additional first-year depreciation tax deduction equal to 50 percent of the value of qualified property investments, such as machinery and equipment. Tiberi said in May that permanently extending the tax break will help companies better access capital, invest in new facilities, and create jobs.

“This tax feature is popular with business and farms because it helps manage cash flow, minimize tax liabilities, and reduce the need to borrow from lenders,” Representative Richard Hanna (R-NY) said in a written statement on Friday. “Overall, bonus depreciation makes it easier and more affordable for businesses to make costly capital investments which are necessary to grow their operations and create new jobs.”

Additionally, the bill would allow taxpayers to claim a portion of unused alternative minimum tax (AMT) credits in lieu of bonus depreciation. The bonus depreciation and AMT provisions both expired on December 31, 2013.

The legislation, which according to an estimate from the Joint Committee on Taxation would add roughly $287.4 billion to the federal deficit over the next 10 years, was passed by the House Ways and Means Committee on May 29.

Randall Stephenson, chairman and CEO of AT&T Inc. and chairman of the Business Roundtable, said in a statement on Friday: “Today’s House vote is a positive step toward accelerating higher business investment and growth, which are needed to restore the productive capacity of the US economy and propel job creation. Fifty percent expensing reduces the cost of capital for business investment, thereby allowing business to undertake a greater amount of investment, so the Senate should act without delay.”

However, the bill is expected to stall in Congress as the Senate is unlikely to vote on any tax break legislation before the November midterm elections.

Even if the Senate were to pass the House’s proposal to permanently extend bonus depreciation, President Obama’s senior advisors would recommend that he veto the bill.

The White House criticized the legislation on Thursday, saying the bonus depreciation provision was enacted in 2009 to provide short-term stimulus to the economy, and it was never intended to be a permanent corporate tax cut. The Obama administration also said the bill includes no cost offsets, and the $287 billion price tag would wipe out more than one-third of the deficit reduction achieved by the American Taxpayer Relief Act of 2013.

“The deficit increase in HR 4718 is more than 20 times the cost of the proposed extension of emergency unemployment benefits, which Republicans are insisting be offset, and more than triple the discretionary funding increases for defense and nondefense priorities enacted in the Bipartisan Budget Act of 2013, which were offset,” the White House said. “House Republicans also are making clear their priorities by rushing to make business tax cuts permanent without offsets even as the House Republican budget resolution calls for raising taxes on 26 million working families and students by letting important improvements to the Earned Income Tax Credit, Child Tax Credit, and education tax credits expire.”

The Obama administration added that it wants to work with Congress to make progress on measures that strengthen the economy and help middle-class families, including pro-growth business tax reform.

“However, making costly business tax cuts permanent without offsets represents the wrong approach,” the White House said.

Related article:

White House Opposes House GOP’s Bonus Depreciation Bill

About Jason Bramwell

Jason Bramwell

Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.


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By aieahi
Jun 26th 2015 01:11

Interesting that the President is opposed the bills that will stimulate and SUSTAIN jobs. The cost of this legislation is more than offset by the taxes payed by increased production and labor taxes...very short sighted on behalf of the anti-business cartel...

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By ThAcadia
to jlinick
Jun 26th 2015 01:11

Billionaires just keep getting richer and the middle class stagnant, yet your stupidity doesnt allow you to see these "SUSTAINED JOBS" keep being shipped to China.
The issue isnt being opposed to it, its been in existence for 12 years. It is the issue of making it permanent. By doing so, the incentive is gone, and businesses simply sell off quickly.
I dont understand why you still think trickle down economics still work. These companies tend to buy equipment and send the jobs to China. More than 50,000 factories have been moved or shut down in the US. Why you think corporations would out of the goodness of their hearts spread the wealth is ignorant and irresponsible. Continuing economic models that have been faiiling for the past 30 years is stupid.
I'm a current engineering college student and I am curious... what state do you live and work?, cause your "SUSTAIN jobs" through such irresponsible behavior has been disproved time after time. I bet you're one of those ignorant morons who's on government subsidies yet openly reject Obamacare though u benefit from it.
These companies get tax cuts and rather than bring jobs to the U.S. increase profits through slave labor in China.
Obama just asked for 3.7 billion to process these immigrants and deport them faster, in addition to a little under 7 billion to fix our failing infrastructure (I'm an engineer, so I know) and yet its denied.
You seem to forget that America's greatest economic times came during regulations (Roosevelt) and infrastructure building (Eisenhower), not welfare to the rich.

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By Carl Spackler
to jlinick
Jun 26th 2015 01:11

Not interesting. It is par for the course.

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By Avas Granddad
Jun 26th 2015 01:11

Over 3 million former long-term employed, tax-payers, cut off from unemployment benefits, at no fault of their own and the Republicans in the House continue to ignore them. Too many millionaires in Congress, that's why any tax related bill gets fast tracked, while the elected officials who are suppose to be the eyes, ears and mouth of the people, have allowed the LTUs to sink further into poverty.

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By Joe Dentremont
Jun 26th 2015 01:11

Learning about this today. Wondering where this bill stands. This is a tough call. The tax brake helps dividend paying companies, like ATT, distribute more of their 87% payout on earnings. I wonder how much tax is collected on the dividend payouts, for the large publicly traded companies that pay out a fix percentage of earnings as a dividend, in comparison to the tax brake. I'm wondering if the $287B number is a true tax brake number

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By Samson
to RebeccaTorelli
Jun 26th 2015 01:12

we kinda need to get more strict on this because many companies are in fact using it when their appliances are not even worn out. if we cut this by a max $10 Billion (currently costs 76 Billion annually) we can provide free education for students, among other things.

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