The House Ways and Means Committee passed Thursday a package of tax extenders, including a permanent extension of bonus depreciation, as well as extenders that deal with retirement planning and charitable giving.
The committee voted to make permanent the rule allowing certain tax-free distributions from individual retirement accounts for charitable purposes.
Also, the committee voted to permanently extend and expand the charitable deduction for contributions of food inventory and to modify the tax rate for excise tax on investment income of private foundations.
As political strategist Greg Valliere notes in his Friday commentary, outgoing Ways and Means Chairman David Camp, R-Mich., “earnestly believes in permanent, not temporary, tax solutions” — thus, the permanent tax break on Thursday of bonus depreciation — which would “cost a mere $287 billion over the next decade.”
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In the absence of comprehensive tax reform, the Tax Foundation argues that “a permanent extension” of bonus depreciation “is the best option to spur investment, lift wages, grow the economy, create jobs and increase federal revenue.”
Bonus depreciation, also known as bonus expensing, allows all businesses to immediately deduct 50% of investment in equipment and software with the remainder to be written off over a few years according to the normal depreciation system, the Tax Foundation’s William McBride explains in a recent blog.