In a vote of 258-160, the House of Representatives on Friday approved making a temporary corporate tax break permanent, making it easier for companies to invest in equipment, the Washington Examiner reports.
While the bill would allow companies to write-off equipment-related expenses much more easily, the White House has indicated even before the vote took place that it will veto the bill, as the resulting effects of the tax break would add $287 billion dollars to the deficit in the next decade.
Sponsored by Ohio Republican Rep. Pat Tiberi, what the tax break accomplishes is that it allows businesses to write-off expenses that would normally be spread out over several years. This bonus depreciation tax break expired at the beginning year, in addition to around 50 other tax breaks.
According to the White House, the bonus depreciation tax break, originally brought on in 2008, “was never intended to be a permanent corporate giveaway.”
The Senate and House are working on completely different tracks. The Senate is working on a package that would extend temporary tax breaks through 2015, whereas the House is pushing to make a variety of tax breaks permanent.
“It’s easy, if you want to grow the economy, encourage job creation and increase federal revenue, you support making bonus depreciation permanent,” said Rep. Pat Tiberi of Ohio. “Permanency gives job creators the certainty they need to plan and invest in their businesses, including hiring employees.”
Chief Economist Will McBride at the Tax Foundation agreed with Tiberi’s assessment.
“It’s a positive sign that Congress is getting serious about how to spur the economy after having seen the economy shrink in the first quarter. It’s definitely a good idea to make something like this permanent,” McBride told The Daily Caller News Foundation.
“The Senate has proposed to extend it another two years to continue the usual business of passing it on a temporary basis, but I think the House has a better idea of how this affects the economy: it lowers the cost of investment, and it’s part of the planning process for investors and businesses. It’s a forward looking operation,” he added.
“This idea that it should be temporary has never made sense economically. The reason why Congress originally agreed to do it on a temporary basis is that they said they couldn’t afford to do it on a permanent basis. However, it actually increases productivity, raises workers’ wages, and creates jobs, which in turn creates more tax revenue.”
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