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Congress OKs tax package that will expire in two weeks

 

 

By DAVE BLOWER JR.

Farm World, Senior Editor

 

WASHINGTON, D.C. — On Dec. 16, the U.S. Senate voted 76-16 to adopt a tax extenders package that holds key provisions for small businesses such as section 179 expensing and bonus depreciation. However, this $42 billion tax incentive is set to expire at the end of 2014.

The tax extenders package was passed by the U.S. House of Representatives on Dec. 3 by a 378-46 vote, and it now heads to President Barack Obama for approval.

"I’m pleased that Congress finally took action to approve an extension of a series of vital tax provisions that help support manufacturing and jobs in the United States," said Assoc. of Equipment Manufacturers (AEM) President Dennis Slater. "While this action is welcome, it is also long overdue; equipment manufacturers and their customers shouldn’t have to wait until mid-December to learn what their tax obligations were for virtually the entire preceding year."

The Section 179 extension provides a higher deduction level for some capital expenditures such as machinery and equipment, and the extension of bonus depreciation.

National Cattlemen’s Beef Assoc. (NCBA) President Bob McCan said this is great news for cattlemen. "America’s cattle producers are primarily family-owned small businesses who need stability in the tax code in order to make sound business decisions," said McCan, a Victoria, Texas cattleman. "This tax extenders package encourages economic growth and provides greater certainty in the tax code."

Kent Bacus, NCBA director of legislative affairs, said the retroactive extension means producers will operate under an expired tax code in 2015, but it could add the needed pressure to complete a comprehensive tax reform deal in the New Year.

"Last year producers were able to expense up to $500,000 on capital investments, but this year that was lowered to $25,000," Bacus said. "For large equipment purchases and other capital investments, cattle producers need certainty in order to properly plan for their business."

Section 179 earned support from the National Milk Producers Federation (NMPF) as well as the Illinois Soybean Growers. "As a soybean grower, I welcome this federal tax extension as it provides continuity and stability for my fellow producers who use these programs," said Stan Born, a Dunlap, Ill. soybean farmer. "However, farming requires long-term planning and, consequently, we need a more permanent solution. I hope that both chambers will work together on a resolution and extend these critical tax incentives into the future."

In November, NMPF joined 41 other agricultural organizations in urging Congress to include Section 179 in any tax bill considered in its post-election session.

"Dairy farming requires significant investments in machinery and equipment," said NMPF President and CEO Jim Mulhern. "By allowing producers to immediately write off these purchases, extending Section 179 gives producers a year-end incentive to invest in their businesses while it reduced their record-keeping burden."

A 50 percent bonus depreciation for the purchase of new capital assets, including farm equipment, is included.

Other beneficiaries of these tax breaks include multinational corporations such as General Electric Co. and Intel Corp., along with individuals who sold homes in short sales or live in states without income taxes.

"Equipment manufacturers are a perfect example of the types of businesses that are affected by these tax provisions," Slater said. "AEM members closely monitored the debate over Section 179 expensing, bonus depreciation and the R&D tax credit because, for them, this debate wasn’t an abstraction – it’s a matter of real dollars and cents.

"AEM will work with the next Congress to pursue sensible tax reforms to provide equipment manufacturers with certainty and help promote continued job growth."

Sen. Orrin Hatch (R-Utah) said Congress will have the "dubious distinction" of starting 2015 with all of the provisions expired. By extending the tax breaks through 2014, he said, Congress did the minimum necessary to avoid creating a major disruption to the 2015 tax-filing season or saddling taxpayers with unexpectedly higher bills.

"Never in the history of tax legislation have so many voted for so little and been so disappointed," said Hatch, who is poised to become chairman of the Senate Finance Committee in January.

Eight Democratic senators voted against this tax package including Joe Manchin of West Virginia and Elizabeth Warren of Massachusetts. Eight Republican senators also voted "nay," including Ohio’s Rob Portman and Pennsylvania’s Pat Toomey.

12/17/2014