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Permanent Small Business Tax Break Wins House Approval
The United States House of Representatives recently voted to make permanent a tax break enabling small businesses to write off new equipment purchases up to half a million dollars.
The tax break allows businesses to write off things like computers, machinery, and other types of equipment. It also lets them make improvements to retail properties.
The bill that would extend the break was introduced by Rep. Pat Tiberi (R-Ohio), who says by doing so, it would make permanent a measure that’s been part of the tax code since the ‘50s.
The vote won 272-144. While the majority of votes came from the GOP, there were 53 democrats on board despite otherwise significant opposition from that side of the aisle (142 opposed). Only 2 republicans voted against the bill.
Rep. Dave Camp (R-Michigan), who is chairman of the House Ways and Means Committee said, according to the Wall Street Journal, “It’s time to make it a permanent part of the tax code. Why not do something good for America? What we really need is a permanent policy.”
Republicans believe the temporary tax break being made permanent will help small businesses have certainty and predictability, which would presumably in turn help with things like confidence and hiring.
Opposing Democrats say making the tax break permanent would add $73 billion to the deficit over the next ten years, and are concerned about how it would be paid for. They say it would force cuts to social programs and also make it more difficult to rewrite the tax code.
The White House has threatened to veto the bill.
The White House 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.”
Separately, the House also voted to make permanent a tax break making it easier for small business owners to deduct charitable contributions.
No real progress on these bills is really expected until after the November elections. They still have to go through the Senate, which has already been working on extending tax breaks through next year.
In May, the House voted 274-131 to permanently extend and expand a research and development tax credit that expired at the end of last year. That would add $156 billion to the deficit over the next decade.
Neither the equipment tax break bill nor the research and development bill offer anything to offset the costs.