WASHINGTON, D.C. — Farmers and ranchers would be better able to plan for equipment purchases and other capital expenditures under a bill passed last month by the U.S. House of Representatives, according to an official with the National Cattlemen’s Beef Assoc. (NCBA).
The Jobs for America Act – H.R. 4 – contained 15 pieces of legislation or resolutions previously approved by the House. The package was passed Sept. 18 by a vote of 253-163.
Included in H.R. 4 was a bill originally sponsored by U.S. Rep. Patrick Tiberi (R-Ohio) that called for making permanent 50 percent bonus depreciation on new purchases. Tiberi’s bill passed the House July 11 by a vote of 258-160. The measure made permanent a section of the tax code allowing businesses to deduct 50 percent of the cost of new capital investments in the first year.
"(H.R. 4) is very beneficial because it allows for the making of new capital investment to meet the growing demand for U.S. agricultural products," said Kent Bacus, NCBA associate director for government affairs. "There’s a record demand for ag products right now, and it’s a good time for agriculture. We want to make sure our producers have all the tools available to make plans to be competitive in the 21st century global environment."
The Tax Foundation, a nonpartisan research think tank based in Washington, D.C., has said bonus depreciation would create 212,000 jobs and boost investment and wages. With bonus depreciation, federal revenue would increase 23 percent a year in the long run, according to the foundation.
Another component of H.R 4 would make permanent a section of the tax code regarding the deduction of business expenses for investments such as property and equipment. In 2012-13, small businesses were able to immediately deduct up to $500,000, but this year the amount was $25,000. H.R. 4 would restore the maximum limit to $500,000.
Tiberi also originally sponsored the legislation calling for an increase in the deduction limit. The House passed the bill by a vote of 272-144 on June 12.
The higher deduction limit is "huge," Bacus said. "Equipment sales are an economic stimulus for rural areas. How do you decide in your business plan, during years when cash is available, to make an investment or hold on to the cash? Not just for agriculture, but for all small businesses."
Tiberi, chairman of the House Ways and Means Subcommittee on Select Revenue Measures, said he was pleased his legislation was included in the larger House package. "These measures, along with the broader bill, will go far in helping to spur economic growth, support American employers and get workers back on the job," he said in a statement. "I hope Majority Leader Harry Reid will allow the Senate to promptly consider the bill."
H.R. 4 also includes wording to make permanent the Research and Development Tax Credit, which would encourage more innovation and investment in the United States, according to Tiberi’s office.
The 15 previously passed bills were combined to send a message about how important permanent tax relief is to the House, Bacus noted. The Senate tends to prefer a two-year extension for tax relief while the House prefers a permanent extension, Bacus said. A two-year extension would be retroactive to Jan. 1, 2014, and end Dec. 31, 2015.
The earliest the Senate might consider the package would be when it reconvenes Nov. 12, he said. "I think we might see another two-year extension of tax cuts and hopefully they won’t let them expire altogether," he said. "In the Senate, it’s kind of a crap shoot because it depends on what happens in (Senate) elections."
The value of the provisions included in H.R. 4 is recognized by everyone, said Pat Wolff, senior director of budget and tax policy for the American Farm Bureau Federation. Many of the tax provisions have been extended multiple times, she said. "H.R. 4 is the House saying they’re virtually permanent, so let’s just call them permanent," Wolff explained. "The House is queuing up its position for permanency."
Congress needs to make a decision on the provisions before the end of the year, she noted. "Waiting until next year (to deal with these) is a non-starter," Wolff said. "The value is in end-of-year business tax planning. You can’t backdate the sales agreement for fertilizer to December. For value, these things have to be on the books soon after they get back."
