Congress now has just over 60 days until end of the year adjournment.There is a lot left to accomplish.

Of key interest to taxpayers is the “tax extenders” package, several dozen tax relief provisions which expired in 2014 and need to be continued before the end of the year.

The extenders package is a mixture of good and bad tax policy provisions. By far, the most important tax extender is the so-called “50 percent bonus depreciation” line item.

What is bonus depreciation? Under tax rules, many businesses cannot immediately write off the cost of business investments in the year of the expenditure. Instead, they have to slowly deduct, or “depreciate,” these costs over many years established arbitrarily by Congress.

Computers take five years. Desks take seven years. Buildings take 39 years, unless people live there, in which case it takes 27.5 years.

That’s insane. All business costs should be deductible the year they are incurred. That includes business investments.

The 50 percent bonus depreciation tax extender gets us more than halfway there. Under the provision, half the cost of a business investment is written off in full in year one. The remaining half is subject to normal depreciation rules.

Bonus depreciation is the right tax policy. The tax code should be consistent and clear, and not pick winners and losers. It makes no sense for the tax code to say that a wage payment, or a rent payment, or a box of pencils should be deductible on the one hand, and that a computer or desk is not. That’s arbitrary and distortive. Most tax experts now believe that a business cash flow system is the right starting point for a better tax base.

Bonus depreciation is good for the economy. 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. 

Bonus depreciation should not only be extended–it should be made permanent. Making bonus deprecation permanent will produce immediate and strong economic benefits. A study released by the Tax Foundation found making bonus depreciation permanent will add $182 billion to the economy, increase federal revenue by $23 billion a year, and create 212,000 new jobs.

Congressman Pat Tiberi (R-Ohio) has introduced H.R. 2510, legislation that would make the 50 percent bonus depreciation tax extender permanent. In turn, this will encourage strong job creation and economic growth. ATR endorses this legislation and urges all members of the Congress to vote for and otherwise support this important pro-growth bill.

Bonus depreciation simply must continue under any circumstances. Under ideal tax policy, all the cost of business investment would be expensed in year one. That’s a building block of every conservative tax reform plan from the Fair Tax to the flat tax to everything in between. 

To lose 50 percent bonus depreciation would be a crippling loss.  It represents the biggest gains the conservative movement has achieved toward a consumption tax base, the goal of all conservative tax reformers.  

Bonus depreciation is the most important of all the extenders. If it cannot be made permanent, it at least must be extended.