(The Center Square) – As Republican leaders in Congress work to renew key portions of the 2017 Tax Cuts and Jobs Act via the budget reconciliation process, two lawmakers have introduced a bill of their own to resurrect certain tax deductions for businesses.
The CREATE JOBS Act, sponsored in the House by Rep. Glenn Grothman, R-Wis., and in the Senate by Sen. Ted Cruz, R-Texas, would codify the TCJA’s 100% bonus depreciation, which allowed businesses to completely write off the cost of certain property – including manufacturing equipment and heavy machinery – acquired between 2017 and the end of 2022.
The bill would also make permanent a 2022 TCJA provision that required businesses that choose to fully deduct research and development costs from their taxable income do so over a period of five years, rather than annually.
Additionally, the CREATE Jobs Act would implement neutral cost recovery, which adjusts business tax deductions for rental units and commercial structures to prevent depreciation.
“As Congress considers extending immediate deductions for research and equipment, it’s long past time to give structures similar treatment. The 2017 tax cuts were a leap forward for investment, but they left buildings behind,” Cato Institute’s Adam Michel, who supports the bill, said Tuesday.
“By fixing that omission, the CREATE JOBS Act levels the playing field for all types of investment and unlocks capital for American manufacturing,” he added.
Wisconsin Manufacturers & Commerce, a business and manufacturers association, also expressed support for the bill, calling it a “common-sense policy that is positively pro-business and promotes job creation.”
According to the Tax Foundation, the bill could create over one million jobs and eventually increase GDP by 5.1%.
But if scored using the Congressional Budget Office’s method, which assumes that extending tax cuts costs the federal government money, the provisions could add to the federal debt and deficit in the long run as well, though economic growth might cancel that out.
