This week, the U.S. House Ways and Means Committee will report out H.R. 4718, a bill which would make the "50 percent bonus depreciation" temporary tax extender a part of permanent tax law.
The bill, introduced by Congressman Pat Tiberi (R-Ohio), is a welcome one for taxpayers. All pro-taxpayer Members of Congress should support this bill.
Earlier this year, ATR went on record saying that the bonus depreciation provision is the "crown jewel" of the extenders package, and we urged the Ways and Means Committee to consider a permanent extension of this provision. A dozen free market conservative groups sent a joint letter to Chairman Camp with the same request. We're happy to see that Chairman Camp agrees that this tax policy should become a part of permanent tax law.
H.R. 4718 allows businesses of all sizes to immediately-deduct half the cost of new business equipment investments. The remaining half of the cost remains subject to punitive and slow "depreciation" deductions over many years. Under ideal tax policy, 100 percent of these costs would be recouped in the first year, a policy goal known as "full business expensing." But Congressman Tiberi's bill gets us more than halfway there. That matters greatly for economic growth and job creation.
The capital stock of the economy grows when businesses and households deploy scarce resources toward investments. When a farmer buys a tractor, or an architecture firm buys a computer, they are investing in their own productivity: the farmer can grow more crops; the architecture company can design better blueprints. This increased productivity results in more company profits, higher wages, new jobs, and an increased return to shareholders in their 401(k)s and IRAs. Capital investment is the mother’s milk of wealth creation.
There's not a more pro-growth bill the Ways and Means Committee will consider this entire Congress than H.R. 4718. It deserves the broad and enthusiastic support of not only the committee, but the whole House.