The US House of Representatives voted 258-160 on Friday to extend permanently a business tax break dealing with deductions on depreciation of certain capital investments, a move that would cost US taxpayers an estimated $287 billion over 10 years. Known as "bonus depreciation" and now temporary, the tax break lets companies deduct 50 percent of the costs of equipment purchases right away, instead of depreciating the costs over years. That allows them to lower their federal tax bills.
The Republican-drafted House bill, approved with the backing of more than 30 Democrats, will next go to the Democrat-controlled Senate, where it faces an uphill climb. The White House said on Thursday that if the bill were to win Senate approval and arrive on President Barack Obama's desk, his senior advisers would recommend that he veto it. The administration criticised the measure because it would expand the federal deficit, adding that bonus depreciation "was never intended to be a permanent corporate give-away."
Bonus depreciation has traditionally been used as a temporary economic stimulus meant to encourage businesses to invest in plant and equipment. It was last adopted to help companies recover from the 2007-2008 financial crisis. The Republican backers of the bill want to make it permanent, saying it would spur economic and job growth. "At a time when economic growth is stagnant, making certain tax policy permanent encourages businesses to grow, invest and hire," said a statement from the office of Republican Representative Dave Camp of Michigan, chairman of the House's tax-writing Ways and Means Committee. Representative Sander Levin, the committee's top Democrat and also from Michigan, said that making bonus depreciation permanent detracts from its short-term stimulatory impact.
Comments
Comments are closed.