House Republicans this week will vote - at a cost of $287 billion - to make permanent a temporary tax provision whose very effectiveness is tied to it being a temporary provision, hence why the provision is called Bonus Depreciation. The vote contradicts 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. The provision, which allows corporations to write off investments more quickly, 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:
“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."
