A month ago, Republicans on this committee voted to add $310 billion to the deficit by making permanent six separate tax provisions. Today, they will nearly double that number - adding another $287 billion to the deficit - with a vote on a single tax provision that not only was never meant to be permanent, but one that loses its effectiveness when made so.
I and many of my colleagues have and continue to support a temporary extension of bonus depreciation because it provides capital intensive businesses with an incentive to invest in new equipment now, allowing them to write off the cost at a faster rate than normal.
It is called bonus depreciation for just that reason.
But what the majority is doing today completely eliminates that incentive. Indeed, the Congressional Research Service notes that the measure’s “temporary nature is critical to its effectiveness." What’s more, making it permanent contradicts the Republican Tax Reform draft, which in February proposed repealing the measure entirely.
As CRS noted: “Moving to permanent bonus depreciation is inconsistent with … Chairman Camp’s proposal."
The last decade highlights the temporary nature of this policy. It was put in place during the recession at the early part of the last decade before being allowed to expire in 2005 as the economy improved. In 2008, as a new, deeper recession took hold, the policy was put in place again.
Without an offset, the $287 billion price tag would bring the total that this committee has voted to add to the deficit in the last month to $600 billion. That’s not only more than the entire federal deficit this year, it is greater than all non-defense domestic discretionary spending in 2014.
In moving forward with a permanent extension of a select group of tax extenders, the Majority is once again leaving to an increasingly uncertain fate provisions like the Work Opportunity Tax Credit, the American Opportunity Tax Credit, the New Markets Tax Credit, the Mortgage Relief Debt Forgiveness and the renewable energy tax credits, as well as the long-range status of the EITC and the Child Tax Credit.
And that is not to mention their complete inaction on federal unemployment insurance, which has now been cut off to nearly three million Americans who are desperately searching for work. The cost of extending bonus depreciation could pay for a full year extension of benefits 10 times over.
The Majority has cloaked the extension of bonus depreciation within a package of important tax incentives that support charities and the good work they do in our communities. Indeed, I co-authored alongside Congressman Gerlach the bill to extend the deduction for food inventory donations. But we are not here today basically to debate the good works of charities, or nutrition programs or conservation across this country. There is agreement about their significance, but it is a mistake to approach them in a way that makes provisions permanent without consideration of their place in a broader framework and with reckless disregard for their cost and their impact on other provisions, especially at a time of immense pressures on non-defense discretionary programs.
