House votes to make small business tax break permanent
In a bipartisan vote earlier this week, the U.S. House of Representatives passed legislation to make permanent a provision allowing small businesses to write off up to $500,000 in capital investments.
The Small Business Relief Act (H.R. 4457) included extensions of a handful of tax provisions that were allowed to expire at the end of 2013. Specifically for farmers, ranchers and small businesses, H.R. 4457 raises the threshold for Section 179 deductions on business expenses, like investments in new farm equipment, to $500,000, the level it was in 2012 and 2013. On January 1, 2014, the threshold was reduced to $25,000. Section 179 allows farmers, ranchers and small businesses to take an immediate deduction rather than following a depreciation schedule.
House Small Business Committee Chairman Sam Graves (R-Mo.) said the legislation provides small businesses with needed certainty regarding Section 179 expensing levels.
“The tax burden is always one of the top concerns for small businesses, and small businesses need more certainty in order to budget and make long-term plans,” said Graves. “Small businesses, farmers and ranchers would greatly benefit from this stability as they consider major purchases of equipment. Often these investments require loans and significant advance planning, and it’s important that small businesses know the Section 179 expensing policy isn’t likely to change in the midst of their planning.”
The National Cattlemen’s Beef Association was quick to throw its support behind passage of the legislation and urged the Senate to follow suit. NCBA President Bob McCan said provisions like the ones included in H.R. 4457 “spur economic growth by encouraging the purchase of and investment in machinery and equipment.” He said failure to act by the Senate will “only prolong the effects of a weak economy for producers and the businesses that rely on them.”
While the Republican majority in the House supports extending the so-called tax extenders, more than 50 in all, that expired at the end of 2013 and making some of them permanent, the Democrat majority in the Senate favors extending the majority of them for another two years.
The White House has weighed in as well and stopped short of issuing a veto threat for H.R. 4457, saying while the President supports making expanded expensing permanent for small businesses by closing tax loopholes, H.R. is not offset and will add to the deficit.
With a little over a month left before Congress begins its August recess and before all focus turns to the midterm congressional elections, it’s unlikely that Congress will resolve the tax extenders battle until later in the year after the election.