Against the unanimous opposition of Committee Democrats, Ways and Means Republicans today voted to add $287 billion to the deficit by making bonus depreciation permanent, thereby rendering the tax policy ineffective. The vote contradicted the position that Republicans took in the Tax Reform Discussion Draft that they unveiled in February, within which the GOP proposed repealing the temporary provision. Bonus depreciation was first enacted in 2002 during the economic downturn, before expiring in 2005 as the economy improved. It was enacted again in 2008 as a deeper recession began to take hold.
Here’s what the Congressional Research Service says about the tax policy:
“Bonus depreciation is not a traditional ‘extender.’ It was enacted for a specific, short-term purpose: to provide an economic stimulus during the recession. Its temporary nature is critical to its effectiveness."
What’s more, the Congressional Research Service notes:
“Moving to permanent bonus depreciation is inconsistent with … Chairman Camp’s proposal."
