Firms can write off new equipment under House bill that Obama says he will veto
The House voted Friday to make permanent a temporary tax break that makes it easier for businesses invest in new equipment, one of many expired tax breaks that Congress must deal with by the end of the year.
The tax break allows businesses to more quickly write off the costs of new equipment, making it popular among business groups. But the White House has threatened a veto because the bill would add $287 billion to the budget deficit over the next decade.
The House approved the bill by a vote of 258 to 160.
The tax break, known as bonus depreciation, has been around for years, though it has always been temporary. The latest version was enacted in 2008 to help jump-start the economy.
“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. Patrick J. Tiberi (R-Ohio), who sponsored the bill. “Permanency gives job creators the certainty they need to plan and invest in their businesses, including hiring employees.”
The White House said the tax break “was never intended to be a permanent corporate giveaway.”
Typically, when a business buys equipment or property, it can deduct the cost over a period of years, depending on how long the equipment is projected to last. The tax break allows businesses to write off a larger share of the cost in the first year, immediately reducing tax bills.
The tax break expired at the beginning of the year, along with more than 50 other temporary tax breaks that Congress routinely extends.
The Republican-led House has voted to make a handful of the tax breaks permanent, leaving the fate of others uncertain.
The Democratic-controlled Senate is taking a different approach. Instead of making the tax breaks permanent, senators have been working on a package that would extend nearly all the temporary tax breaks through 2015.
Democratic leaders say their approach would give lawmakers more time to decide which tax breaks to make permanent and which ones to get rid of.
The stalemate is unlikely to be resolved until after congressional elections in November. If Congress renews the temporary tax breaks by the end of the year, taxpayers would be able to claim them on their 2014 returns, which will be filed next spring.