House passes small biz tax credits bill

WASHINGTON (Dec. 18, 2015) — The U.S. House of Representatives has passed a tax cut package that would make several small business tax credits permanent rather than extending them for one or two years, often retroactively.

The package of tax cuts, collectively known as Protecting Americans from Tax Hikes (PATH) Act of 2015, passed in the House by a 318-109 vote, according to the National Federation of Independent Business (NFIB).

The Senate is also expected to pass the bill, according to the Specialty Equipment Market Association (SEMA), which supports the initiative. Among the provisions in the bill affecting small business:

• Permanently extend the research and development (R&D) tax credit.
• Permanently extend the Section 179 deduction limits allowing smaller companies to write off capital investments up to $500,000 in the year the purchases were made with a $2 million cap on annual investments, and indexed for inflation.
• Permanently allow businesses to deduct the cost of investments made to leased property and retail space over 15 years in an equal amount each year.
• Extend through 2016 the 7-year recovery period for motorsports entertainment complexes.
• Renew but gradually decrease the bonus depreciation for investments in capital equipment made through 2019. The bill extends the 50-percent bonus depreciation through year-end 2017, after which the rates would fall to 40 percent in 2018 and 30 percent in 2019.

The bill, according to Senate Finance Committee Chairman Orrin Hatch, R-Utah, House Ways and Means Committee Chairman Kevin Brady, R-Texas, and Senate Finance Committee Ranking Member Ron Wyden, D-Ore., is a bipartisan, bicameral deal on legislation to provide permanent tax relief for hard-working American families, college students, charities, small business and enterprises on the forefront of innovation.

The Committee has posted a video of Rep. Brady outlining the bill before Congress.

The NFIB claims extending these tax credits could lead to tens of thousands of new jobs and billions of dollars in higher economic productivity.

“Reducing the cost of business investment leads to more business investment,” said NFIB CEO and President Dan Danner.  “If there's a good argument to be made against that result I'd like to hear it.”

The legislation would permanently restore the $500,000 threshold, the NFIB noted, which fell all the way down to $25,000 this year.

“That would encourage more businesses to make bigger investments, which would generate a lot more economic activity,” Mr. Danner said.

“Businesses that know they can recoup the cost of big-ticket investments, like new machinery or vehicles or farming equipment, are a lot likelier to make the commitment.  It's good for the purchaser, of course, but it's also good for the firms that manufacture and market the products because they've got more buyers.  It's a way to spur the economy and get things moving for businesses on both sides of the transaction.”  

Likewise, National Small Business Association President and CEO Todd McCracken applauded the bill's passage.

“There is no single item in the tax code more crucial to incentivizing small business investment than Section 179 expensing,” Mr. McCracken said. “But for years, small-business owners' ability to plan for these investments has been held hostage by a dysfunctional Congress that has time and again failed to address these critical tax provisions in a timely or long-term manner, forcing many to hold off on growing their business.

“The importance of this agreement to small business is significant and something NSBA has been urging for years. I congratulate Congressional negotiators for striking this very important growth-oriented agreement.

“Today, more small businesses cite administrative burdens as their number one issue with the federal tax code than do the actual financial cost. A major factor in the growing complexity is various sunsets, expiring, and extended tax laws passed by Congress."