Director of Federal Tax Policy
House Ways and Means Committee Chairman Dave Camp (R-MI) is proposing to make permanent a tax provision known as “bonus depreciation,” which lets businesses take bigger upfront tax deductions for certain new purchases such as machinery and equipment. The proposal to make it permanent, which Chairman Camp plans to bring before his committee today, is economically unjustified and fiscally irresponsible, as we explain in a new analysis.
Ways and Means voted in April to make permanent six corporate “tax extenders” — so named because Congress routinely extends them for a year or two at a time — at a cost of more than $300 billion. (The full House earlier this month passed one of those measures, which would make permanent, and expand, the Research and Experimentation Tax Credit.) Now, Chairman Camp is calling for making permanent the bonus depreciation provision, which is not an “extender” and which, historically, policymakers have enacted only on a temporary basis when the economy is weak and allowed to expire when the economy has recovered.
In bringing such a measure before his committee and signaling his support for it, Chairman Camp is reversing course on his own tax reform plan, which proposed to end bonus depreciation.
Policymakers should not reinstate, and make permanent, bonus depreciation for at least two compelling reasons:
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