Bipartisan legislation designed to lower the tax burden on small businesses was introduced Monday by Reps. Pat Tiberi (R-OH) and Ron Kind (D-WI).
The bill, titled America’s Small Business Tax Relief Act, would make some existing small business expensing practices permanent. The hope is that this policy would assist in developing stability in the early stages of the small business cycle.
“It’s been proven that members of both parties can unite around this issue and pass this critical legislation,” Tiberi said. “It would provide predictability for small business owners by making permanent a small business expensing measure that’s been part of the tax code since the 1950s. Employers have told me over and over that this measure reduces compliance costs for small businesses, reduces the cost of capital, and improves cash flow allowing them to invest, expand and create jobs.”
For many of the last four years, rules regarding expenses that are outlined in Section 179 of the tax code permitted small business owners, farmers and ranchers to immediately deduct up to $500,000 in investments that were used for property, equipment and computer software as opposed to them being required to depreciate those costs over time. Over the years, however, the deduction limit has varied. For 2015, the limit was reduced to $25,000.
The pending legislation would revert the rule back to the 2010-14 level of $500,000 and make it permanent, other than adjustments for inflation.
Similar legislation passed the House on two occasions last year, but failed in the Senate each time. Organizations that stand behind the bill include the National Federation of Independent Business, the Farm Bureau, the Associated Builders and Contractors, and the U.S. Chamber of Commerce.
“Employers in Wisconsin and across America need stability and predictability in their tax planning so they can make important budget and purchasing decisions,” Kind said. “This bipartisan legislation will help small businesses, family farms and other employers by removing uncertainty in the tax code so they can expand their operations and hire new workers.”