PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Coalition Letter in Support of the “Renewing Investment in American Workers and Supply Chains Act”

By at 24 March, 2022, 10:30 am

Dear Member of Congress:

We write in support of the Renewing Investment in American Workers
and Supply Chains Act, legislation to allow accelerated depreciation for all
structures, introduced by Congresswoman Jackie Walorski (R-Ind.) and
Republican Study Committee Chairman Jim Banks (R-Ind.).

This legislation would reduce the depreciation schedule for all nonresidential and residential property to 20 years. Currently, both
nonresidential and residential property are subject to extremely long
recovery periods. The legislation would also allow companies to apply a
neutral cost recovery adjustment to deductions to account for inflation and
the time value of money.

Nonresidential structures such as an office building, store, or warehouse,
has a recovery period of 39 years. Residential rental property, where at
least 80 percent of its rental income is from dwelling units, has a recovery
period of 27.5 years.

Under the tax code, businesses can deduct or “depreciate” the cost of
many investments immediately, a policy known as full business expensing.
The 2017 Tax Cuts and Jobs Act implemented full expensing for assets with
20 years or less of depreciable life through 2022. The provision begins
phasing out through the end of 2026.

This is the right tax treatment – the tax code should allow businesses to
deduct assets immediately. However, because structures had a cost
recovery period above 20 years, they were not included in the TCJA full
expensing provision.

Accelerating the depreciation of structures and applying an adjustment
for inflation and the time value of money would move the tax code closer
to a neutral cost recovery system. Different business expenses should not
receive such disparate treatment in the tax code. There is no reason a
business should be able to deduct the costs of its utilities, rent, insurance,
office supplies, etc. but be required to deduct the cost of their property
over decades.

This bill will grow the economy and promote investment in America more
than any of the central planning schemes currently being considered in
Congress. Allowing businesses to deduct more of the cost of their property
each year increases their capital stock, enabling them to deploy these
resources towards re-investment, higher wages, and new jobs. In
fact, according to the Tax Foundation, moving to a 20-year depreciation
schedule for structures would increase long-term economic output by 1.2
percent, capital stock by 2.3 percent, increase wages by 1.0 percent and
create the equivalent of 231,000 full time jobs.

We urge you to cosponsor and support Reps. Walorski’s and Banks’ bill to
reduce and equalize the depreciation period for nonresidential real
property and residential rental property. This pro-growth policy will make
the tax code more efficient and will help grow the economy as we continue
to rebuild from the damage cause by the COVID-19 pandemic.

Sincerely,

Grover Norquist
President, Americans for Tax Reform

Dick Patten
President, American Business Defense Council

Phil Kerpen
President, American Commitment

Bob Carlstrom
President, AMAC Action

Brent Wm. Gardner
Chief Government Affairs Officer, Americans for Prosperity

Ryan Ellis
President, Center for a Free Economy

Andrew F. Quinlan
President, Center for Freedom and Prosperity

Tom Schatz
President, Council for Citizens Against Government Waste

Adam Brandon
President, FreedomWorks

Heather R. Higgins
CEO, Independent Women’s Voice

Seton Motley
President, Less Government

Brandon Arnold
Executive Vice President, National Taxpayers Union

Tom Hebert
Executive Director, Open Competition Center

Bryan Bashur
Executive Director, Shareholder Advocacy Forum

Jim Martin
Founder/Chairman, 60 Plus Association

Saul Anuzis
President, 60 Plus Association

Karen Kerrigan
President & CEO, Small Business & Entrepreneurship Council

 

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