CHN: House Passes Bonus Depreciation Tax Break for Businesses
On July 11, the House passed (258-160) a bill to make permanent the bonus depreciation tax break for businesses (H.R. 4718). The bill will cost $287 billion over 10 years and was passed without offsetting cuts or revenue increases to pay for the lost revenue the legislation will cause. A motion to limit the tax break to two years and deny the break to corporations that change their residency to overseas to avoid paying U.S. taxes (known as corporate “inversion”) was defeated (191-229). Depreciation allows companies to take a tax deduction for the cost of new equipment, software, and buildings as they lose value over time; bonus depreciation allows the deduction to be taken more quickly. As noted in the June 17 Human Needs Report, bonus depreciation was originally passed in 2002 as a temporary measure, and then was passed again in 2008. It was extended several times before expiring at the end of 2013.
Many advocate groups, including Citizens for Tax Justice, the Center on Budget and Policy Priorities, and Americans for Tax Fairness opposed the bill on many levels. CTJ, for example, cited a July 7 report from the Congressional Research Service that showed that a large majority of businesses said the bonus depreciation tax break would have no effect on the timing of their investment spending and therefore is unlikely to help the economy. In addition, advocates noted (including in an article on CHN’s blog) the hypocrisy in Congress’ willingness to spend nearly $290 billion on additional tax breaks for corporations without offsetting the cost while continuing to refuse to pass unemployment benefits for the long-term jobless at a cost of $10 billion. The House has already passed several other permanent tax cut extender bills with large price tags, with several more having passed the House Ways and Means Committee (with a total cost of $614 billion). None of them have been paid for.
For additional information, see the June 17 Human Needs Report, and leave your comments on this inconsistency on CHN’s blog, Voices for Human Needs.