TPA Leads Coalition Effort Urging Congress to Make Bonus Depreciation Permanent

Comprehensive tax reform continues to be an issue where TPA is working hard to pressure Congress to act. It’s been nearly three decades since the last time Washington did something major on tax reform. While lawmakers continue to delay on moving forward with overall tax reform, there are things they can do to give taxpayers relief while making the tax code work better for everyone. With that in mind, TPA led a coalition effort sending this letter to Congress last week urging both the House and Senate to make accelerated expensing, or “bonus depreciation” permanent. The program helps businesses by making it easier for companies to write off expenses. It’s had a positive impact on the small business economy and since 2008 it’s been renewed every two years, until this year. TPA was joined on the letter by the 60 Plus Association, American Conservative Union, Americans for Prosperity, Campaign for Liberty, Center for Individual Freedom, Competitive Enterprise Institute, Council for Citizens Against Government Waste, Frontiers of Freedom, Grassroot Hawaii Action, Hispanic Leadership Fund, Institute for Liberty, Less Government, Log Cabin Republicans, National Taxpayers Union, R Street Institute, and the Small Business Entrepreneurship Council.

Read the letter below:

Coalition Urges Congress to Make Bonus Depreciation Permanent

October 15, 2015

Dear Senator/Representative

In 2008, a bipartisan Congress tried to jumpstart an ailing economy by implementing an important pro-growth tax relief program known as accelerated expensing, or “bonus depreciation.”  This makes it easier for companies to write off expenses more quickly than they had previously been able to – letting the company account for all or a share depreciation in the first year of a capital expenditure, rather than amortizing it over several years.

Fundamental tax reform that includes full business expensing remains a top priority.  But for the here and now, this program has been a success.  Congress has renewed it every two years—until this year.

We urge you to support the current legislation, H.R. 2510 introduced by Rep. Pat Tiberi (R-Ohio) and S 1660 introduced by Sen. Pat Roberts (R-Kansas), would make permanent the extension of accelerated expensing.  This legislation is an important pillar of a pro-growth tax reform agenda that will create jobs and incent greater investment in infrastructure throughout our economy

Bonus depreciation encourages investment. Accelerated expensing gives businesses the certainty they need to spend money on capital expenditures in an uncertain economic environment. A recent study out of Harvard and the University of Chicago found that 50 percent expensing raises investment appreciably; sometimes up to 30 percent over a given time period. This makes sense: where normal depreciation schedules allow the company to depreciate the value of an investment over the course of the decade, this legislation allows companies to take that tax write off more quickly, reducing the stated value of the capital expenditure. By guaranteeing that companies can write off the value of an investment sooner, bonus depreciation legislation encourages companies to get those investments done quicker.

Bonus depreciation builds the economy and creates jobs. Capital investment contributes to economic growth both directly and indirectly. When companies spend money on capital purchases, they not only benefit the recipient of the sale; they also create jobs, stimulate local economies and unleash the power of the multiplier effect. That money goes not just to contractors involved in the project, but is also circulated throughout the local economy as those contractors hire local workers and subcontractors, who then spend that money on local goods and services, and the cycle continues.

Bonus depreciation moves toward fundamental tax reform. “Full business expensing” is a cornerstone of pro-growth tax reform. Bonus depreciation moves the current tax system more than halfway to full business expensing. Making bonus depreciation permanent would be a massive victory and big step forward towards meaningful tax reform that will help American businesses compete in the face of an increasingly difficult regulatory environment here at home, and the incredibly competitive global marketplace.

Growing our economy is the only way to create jobs, pay down the debt and ensure our nation’s long term financial security.

Permanently extending the benefits of bonus depreciation will encourage investment, build the economy and create jobs. We hope you support permanent extension. At the very least, it’s crucial to support S. 1666, the 2-year extension of the 50 percent expensing bill introduced by Sens. Debbie Stabenow (D-Mich.) and Pat Roberts, which will continue our nation’s forward-looking policies that encourage investment in new jobs and equipment.

Sincerely,

David Williams, President, Taxpayers Protection Alliance
Seton Motley, President, Less Government
Karen Kerrigan, President & CEO, Small Business Entrepreneurship Council
Jeff Mazzella, President, Center for Individual Freedom
Andrew Moylan, Executive Director and Senior Fellow, R Street Institute
Norm Singleton, Senior Vice President, Campaign for Liberty 
Brent Gardner, Vice President of Government Affairs, Americans for Prosperity
Matthew Kandrach, Vice President, 60 Plus Association
Iain Murray, Vice President, Competitive Enterprise Institute  
Brandon Arnold, Executive Vice President, National Taxpayers Union
Andrew Langer, President, Institute for Liberty
Andresen Blom, Executive Director, Grassroot Hawaii Action
Gregory T. Angelo, President, Log Cabin Republicans
Mario Lopez, President, Hispanic Leadership Fund
George Landrith, President, Frontiers of Freedom
Thomas Schatz, President, Council for Citizens Against Government Waste
Matt Schlapp, Chairman, American Conservative Union
Dan Schneider, Executive Director, American Conservative Union