House votes to make bonus depreciation tax credit permanent

The House on Friday passed legislation to extend the bonus depreciation tax credit for businesses permanently.

The measure, which passed 258-160, is the latest in the House GOP’s efforts to extend a string of temporary tax incentives indefinitely.

{mosads}House Ways and Means Committee Chairman Dave Camp (R-Mich.) said that permanently renewing the credit, which expired at the end of 2013 along with nearly 50 other breaks, would pave the way for tax reform.

“By making long-standing features of the tax code permanent, we can facilitate a comprehensive overhaul of the tax code,” Camp said.

But Democrats said the lack of offsets for the tax extender measure ran counter to GOP demands for other bills, such as renewing unemployment insurance.

“What’s being done here is totally inconsistent,” said Rep. Sandy Levin (D-Mich.), the top Democrat on the House Ways and Means Committee. 

Under bonus depreciation, companies can generally write off 50 percent of certain purchases in the first year.

Consideration of a package to renew more than 50 tax breaks has stalled in the Senate due to the ongoing disagreement over amendments.

The House, meanwhile, has also passed permanent extensions of the research and development credit, a provision known as Section 179, to allow small businesses to write off investments, and breaks to help corporations that do not pay income taxes and pass along income to shareholders.

In the process, the tax breaks have become a part of both parties’ election-year messages. 

President Obama and Democrats say the GOP’s tax cut extensions — bonus depreciation alone costs some $287 billion over a decade — are both fiscally irresponsible and hypocritical. 

The White House pointed out in its threat to veto Friday’s bill that Republicans have demanded offsets for extending long-term unemployment insurance, but not for hundreds of billions of dollars in tax breaks. 

Bonus depreciation was among dozens of temporary tax breaks to expire at the end of 2013. Unlike the House, the Senate is seeking to extend almost all of those incentives on a two-year basis. 

Business groups say the bonus depreciation write-off gives companies more leeway to purchase other equipment, giving the economy a jolt in the process. But critics say they’ve seen no proof that the incentive has been a boon to economic growth.

Bonus depreciation was first put into place during President George W. Bush’s tenure in the White House to help stimulate a lagging economy. 

Camp had actually sought to slow down business write-offs in the tax reform draft he released this year, raising eyebrows among conservative tax analysts.

Levin indicated that Democrats would ultimately support an extension of the bonus depreciation break, but only if it is paid for.

“There likely will be an extension of bonus depreciation in an extender package, if we ever get to it,” Levin said.