The House Ways and Means CommitteeThe Committee on Ways and Means, more commonly referred to as the House Ways and Means Committee, is one of 29 U.S. House of Representative committees and is the chief tax-writing committee in the U.S. The House Ways and Means Committee has jurisdiction over all bills relating to taxes and other revenue generation, as well as spending programs like Social Security, Medicare, and unemployment insurance, among others. will markup a permanent extension of bonus depreciation on Thursday. Permanently extending bonus depreciationBonus depreciation allows firms to deduct a larger portion of certain “short-lived” investments in new or improved technology, equipment, or buildings, in the first year. Allowing businesses to write off more investments partially alleviates a bias in the tax code and incentivizes companies to invest more, which, in the long run, raises worker productivity, boosts wages, and creates more jobs. would spur investment, lift wages, grow the economy, and increase federal revenue.
- Growth: Bonus depreciationDepreciation is a measurement of the “useful life” of a business asset, such as machinery or a factory, to determine the multiyear period over which the cost of that asset can be deducted from taxable income. Instead of allowing businesses to deduct the cost of investments immediately (i.e., full expensing), depreciation requires deductions to be taken over time, reducing their value and discouraging investment. would grow the economy by 1 percent: This would add $182 billion to the economy.
- Investment and Wages: Bonus depreciation would increase investment and wages: Permanently extending bonus depreciation would increase the capital stock by over 3 percent and increase wages by about 1 percent by lowering the current cost of investment.
- Jobs: Bonus depreciation would create 212,000 jobs.
- Revenue: Static revenue estimates are misleading. Bonus depreciation would increase federal revenue by about $23 billion a year in the long run, due to increased economic activity.
Update: More on Bonus Depreciation:
The Economics of Bonus Depreciation:
- The Economic and Budgetary Effects of Bonus Expensing
- The Economic Effects of Bonus Depreciation
- Permanently Extending Bonus Depreciation Grows the Economy
Bonus Depreciation, Investment and Growth:
- Bring Back Bonus Expensing, Bring Back Jobs
- Top 10 Things to Know about Investment and Tax Policy
- Investment, GDP Slow in First Quarter: Bad Weather or Bad Tax Policy
- The Economic and Budgetary Effects of Full Expensing of Investment
- Slow Economic Growth Does Not Need to Be the New Normal
History of Bonus Expensing:
- Has Bonus Expensing Helped Investment?
- What is Investment and How Do We Get More of It?
- Faltering Investment and the Need for Expensing