Uncertainty is the bane of manufacturers and indeed the entire business community. It’s one thing when nature throws you a few curve balls but it’s an entirely different story when we create this uncertainty ourselves. And this is the case with a huge chunk of our tax code, which expired at the end of 2013, leaving many companies in limbo on a number of fronts.
Senators currently are considering retroactively extending the “extenders package,” for 2014 and 2015 and NAM supports this effort as a bridge as we work towards comprehensive tax reform. Yet it’s still a short-term fix for a long-term problem.
Senator John Thune (R-SD) understands this and, along with several colleagues, is pushing to make some of these temporary provisions a permanent part of the tax code. Manufacturers think this is an excellent—and long overdue—idea.
Senator Thune’s proposal, which he is proposing as an amendment to the pending tax bill, includes a permanent and more robust R&D tax incentive for innovating companies and more generous write-offs for smaller businesses making capital investments. The House agrees with this approach and last week approved a bill by Reps. Kevin Brady (R-TX) and John Larson (D-CT) that would make a strong R&D incentive a permanent part of our tax system.
Like the House bill, Senator Thune’s R&D tax credit proposal would boost the alternative simplified credit (ASC) to 20 percent, increasing its incentive value and ensuring continued U.S. leadership in global innovation. As for encouraging small business investment, the Senator would allow companies to take an immediate write-off for up to $500,000 in investments if they invest up to $2 million per year. This proposal parallels a bill authored by Reps. Patrick Tiberi (R-OH) and Ron Kind (D-WI) , which passed the Way and Means Committee last month, that would make Section 179 permanent at the same levels. We hope that the House will take up this bill in the near future as well.
And the push for permanent, pro-growth tax policy shouldn’t stop there. Other temporary “extenders” also should be made permanent ASAP. Including bonus depreciation, deferral for active financing and the “look-through” rule for controlled foreign corporations.
Making these provisions a permanent part of the tax code will spur business investment and job creation, which is key to economic growth and competitiveness. And those are goals of which all Americans are certain.