Making Bonus Depreciation Permanent to Be Debated by House Panel

Ways and Means Committee will also mark up tax extenders on retirement planning and charitable giving

Another tax extender up for debate allows tax-free IRA distributions for charitable purposes. Another tax extender up for debate allows tax-free IRA distributions for charitable purposes.

More On Tax Planning

from The Advisor's Professional Library
  • Long Term Care Insurance: Premiums While premiums for qualified long-term-care insurance may be deductible as medical expenses there are exceptions to this general rule. Learn how to avoid unnecessary tax liabilities.
  • Health Insurance: Health and Medical Savings Accounts A Health Savings Account is a trust created exclusively for the purpose of paying qualified medical expenses of an account beneficiary. Although they are popular, they are not without their pitfalls and the regulations can be complicated. Learn more about how to avoid federal taxation on the accumulation and distributions of HSA.

The House Committee on Ways and Means plans to mark up on Thursday H.R. 4718, to provide a permanent extension of bonus depreciation, as well as other tax extenders that deal with retirement planning and charitable giving.

In the absence of comprehensive tax reform, the Tax Foundation argues that “a permanent extension” of the bonus depreciation “is the best option to spur investment, lift wages, grow the economy, create jobs and increase federal revenue.”

The Tax Foundation, a nonpartisan think tank, says that bonus deprecation would have a large impact on the economy and, according to the foundation’s analysis, be a revenue gainer in the long term in terms of:

— Growth: Bonus depreciation would grow the economy by 1%. This would add $182 billion to the economy.

— Investment: Bonus depreciation would increase investment by over 3%. Permanently extending bonus depreciation would increase the capital stock (the tools we use to produce) by over 3% by lowering the current cost of investment.

— Wages: Bonus depreciation would increase wages by about 1%, with the largest increase going to those at the bottom.

— Jobs: Bonus depreciation would create 212,000 jobs.

— Revenue: Static revenue estimates are misleading. Bonus depreciation would increase federal revenue by about $23 billion a year in the long run, due to increased economic activity.

The committee also plans to mark up on Thursday the following tax extenders that deal with retirement planning and charitable giving:

HR 4619, “to make permanent the rule allowing certain tax-free distributions from individual retirement accounts for charitable purposes”; HR 4719, “to permanently extend and expand the charitable deduction for contributions of food inventory”; HR 3134, “Charitable Giving Extension Act”; HR 4691, “to modify the tax rate for excise tax on investment income of private foundations.”

-- Check out Top 9 Biggest Tax Scams of 2013 on ThinkAdvisor

Reprints Discuss this story
This is where the comments go.