Tax Policy and Bonus Depreciation
The debate over bonus depreciation in tax policy is causing economic uncertainty as businesses delay investments due to the temporary nature of the provision. There is a call for Congress to make bonus depreciation permanent to provide clarity and encourage long-term investments.
Key Points
- Bonus depreciation was introduced in the 2017 Tax Cuts and Jobs Act
- Washington made the provision temporary, causing economic uncertainty
- Calls for Congress to make bonus depreciation permanent for clarity and long-term investments
Pros
- Encourages business investment by allowing immediate deduction of capital investments
- Promotes upgrading equipment, expanding operations, and modernizing infrastructure
- Front-loads economic growth by making investment cheaper today
Cons
- Uncertainty over the provision's expiration dates slows capital spending
- Businesses delay major purchases in hopes of a better deal in the future
- Tax uncertainty acts as an invisible tax, discouraging investments and expansion