June 12 (Bloomberg) -- Small businesses would be able to write off capital purchases more quickly under a $73.1 billion tax reduction passed today by the U.S. House of Representatives.
The House voted 272-144 to revive the provision that lapsed at the end of 2013. The new measure would have no expiration date.
“This is, over the last 50 years, a tried-and-true provision that we know creates jobs,” said Representative Pat Tiberi, an Ohio Republican. “And to provide certainty is so critical.”
Under current law, businesses can get immediate write-offs, without spreading deductions over several years, on purchases of up to $25,000. The benefit is phased out for companies with more than $200,000 in capital purchases.
The bill would raise those amounts to $500,000 and $2 million, the levels in place in 2013, and would index them to rise with the inflation rate. The proposal also would make it easier for companies to take the writeoff for spending on real property, heating and air conditioning units and off-the-shelf software.
Among the groups supporting the legislation are the American Sugarbeet Growers Association, the National Association of Convenience Stores and the U.S. Chamber of Commerce.
“Expensing does not lead to a loss of revenue to the government over the lifetime of an investment -— it is not a matter of if revenue is collected, but when,” those groups and more than 150 others said in a June 9 letter to lawmakers.
“Small business expensing gives business owners the ability to maximize investment in their companies during years when they have positive cash flow,” the business leaders’ letter said.
President Barack Obama opposes the bill, and his administration said his advisers would recommend a veto it if it were passed. The $73.1 billion in forgone revenue to the government over the next decade should be offset to keep from increasing the budget deficit, the administration said.
“Republicans are imposing a double standard by adding to the deficit to fund tax breaks for businesses, while insisting on offsetting the cost of measures that help middle-class and working Americans,” the administration said in a policy statement June 10.
Representative Lloyd Doggett, a Texas Democrat, said today, “To the Republicans, deficits only matter when asking seniors and students and others to sacrifice, but not when it comes to adding one tax break after another.”
Democrats and Republicans are debating the best strategy for reviving dozens of tax breaks that expired at the end of 2013. That collision may not be resolved until after the November congressional elections.
House Republicans are picking individual items and voting to make them permanent features of the tax code. Senate Democrats want to extend almost all the policies through 2015. The House also passed a bill today that would make it easier for some businesses organized as S corporations to sell certain assets and make charitable contributions. That measure would also extend lapsed provisions indefinitely. It would add $2.1 billion to budget deficits over the next decade.
That bill passed on a 263-155 vote.
The small-business expensing bill is H.R. 4457. The measure regarding S corporations is H.R. 4453.
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