U.S. Sen. Shelley Moore Capito (R-WV) recently joined 11 other Republicans to unveil legislation that would incentivize and support investments in job-creating projects and cutting-edge equipment and machinery by reducing the cost of capital equipment purchases and the debt financing that makes them possible.
“By allowing greater investment in equipment and operations, this bill strengthens our global competitiveness and supports the hard-working Americans driving innovation and economic growth across the country,” said Sen. Capito, one of 11 original cosponsors of the Growing America’s Small Businesses and Manufacturing Act, S. 1688, which is sponsored by U.S. Sen. John Barrasso (R-WY).
If enacted, S. 1688 would reduce tax bills for business owners looking to purchase equipment — including machinery, farming equipment, energy infrastructure, building upgrades, commercial vehicles, mining equipment, etc. — to free up resources that could go toward employee salaries, materials, and other business expenditures.
“West Virginia’s manufacturers and small business owners are the backbone of our economy,” Sen. Capito said. “The Growing America’s Small Businesses and Manufacturing Act will give them the tools they need to compete, grow, and hire.”
Specifically, S. 1688 includes two pro-growth tax proposals that aim to boost investment in capital-intensive industries like manufacturing, energy production, and agriculture.
The first reform, the Expanded Business Interest Deduction, would revise the limitation from 30 percent of a business’s Earnings Before Interest and Taxes (EBIT), back to 30 percent of Earnings Before Interest, Taxes, Depreciation, Amortization, and depletion (EBITDA) to protect businesses from being punished for investments in machinery, capital equipment, mining, drilling, and research and development, according to a bill summary provided by Sen. Capito’s staff.
The second reform included in the bill, Enhanced Small Business Expensing, would expand Section 179, which allows taxpayers to deduct the cost of certain business assets in the year they are purchased rather than depreciating them over time.
The bill would raise the deduction cap to $2.5 million to help hasten small businesses’ access to capital, the summary says, and would cover a wide range of eligible expenses, including machinery, mining tools, farming implements, energy production equipment, commercial vehicles, building upgrades, and other investments.
The National Association of Manufacturers, the National Federation of Independent Business, the RAIN Coalition, and the National Restaurant Association support the bill, which also includes original cosponsors U.S. Sens. Marsha Blackburn (R-TN), Steve Daines (R-MT), Todd Young (R-IN), and John Hoeven (R-ND).