About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Kyle Pomerleau, Economic and Budgetary Impact of Temporary Expensing 1 (2017)

handle is hein.taxfoundation/ecbuimtx0001 and id is 1 raw text is: FISCAL FACT No. 561 Oct. 2017 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) non profit organization. ©2017 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 Economic and Budgetary Impact of Temporary Expensing Kyle Pomerleau Economist, Director of Federal Projects Key Findings Recently, a group of Republican lawmakers known as the Big Six released a tax reform framework that proposed a number of individual and business tax changes. In addition to reducing the corporate tax rate to 20 percent and pass- through maximum tax rate to 25 percent, the Framework proposes allowing businesses immediate full expensing of all assets (except for buildings and other structures) for at least five years. Limiting expensing to certain types of capital investments and making it temporary would greatly reduce the 10-year budget impact. However, there is a downside: it would greatly limit the economic benefit of expensing. We estimate that a five-year, limited expensing provision would only temporarily boost output, by at most 0.78 percent after five years. By the end of a decade, GDP would be only 0.18 percent higher than it otherwise would be, and the remaining gains would be lost soon after. Temporary expensing may encourage businesses to shift future investments forward to take advantage of the larger deductions, but would not raise the level of investment permanently. Instead of making expensing temporary, lawmakers could pursue other ways to speed cost recovery on a permanent basis, with permanent economic gains, without drastically reducing revenue. One option to reduce the cost of expensing is called depreciation indexing or neutral cost recovery, which we estimate could reduce the cost of expensing by 90 percent in the first decade while providing similar economic benefits. 202.464.6200 taxfoundation.org

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most