Tiberi Measure to Bring Stability to Small Busunesses Passes House

Statement

U.S. Congressman Pat Tiberi (R-OH) today applauds the House passage of his measure H.R. 636, America's Small Business Tax Relief Act, which permanently extends increased small business expensing levels outlined in Section 179 of the tax code. This bill will provide stability for employers, leading to their growth and expansion. It passed by a vote of 272-142.

"I am pleased that members of the House continue to see the importance of this legislation for small employers," said Congressman Tiberi. "The predictability of making the increased levels of Section 179 of the tax code permanent would help reduce compliance costs for small businesses, reduce the cost of capital, and improve cash flow allowing employers to invest, expand, and create jobs."

From 2010-2013, the expensing rules outlined in Section 179 of the tax code allowed small business owners, farmers, and ranchers to immediately deduct up to $500,000 in investments in property, equipment, and computer software rather than depreciating such costs over time. Late last year, Congress passed and the president signed into law a measure to retroactively extend these levels for 2014. However, over the years, the deduction limit has varied; this year it dropped to $25,000 of qualifying property.

The Tiberi bill would make permanent the levels effective during the 2010-2014 tax years allowing taxpayers to expense up to $500,000 in investments in property, equipment, and computer software with the deduction phased out after investments exceed $2 million. These amounts would be adjusted for inflation.

Support for making increased small business expensing permanent has been longstanding and widespread. Organizations like the National Federation of Independent Business, the Farm Bureau, the Associated Builders and Contractors, and the U.S. Chamber of Commerce support this bill. Attached is a letter of support for this measure from more than 170 organizations.

"We have taken advantage of the section 179 deduction in prior years as well as this year," explained Kirk R. Iler, Controller at Claggett & Sons, Inc. in Newark, Ohio. "It reduces the tax burden for small businesses and is an important part of our decision making process when evaluating equipment purchases. Making this deduction permanent will be beneficial for capital purchases planning for small business. In recent years, Congress's decision to extend the deduction at the end of the year has prevented us from taking advantage of this provision. Had the deduction not been available we would not have purchased equipment."

H.R. 636 also includes these two other measures originally sponsored by Congressman Dave Reichert (R-WA:

Permanent S Corporation Built-In Gain Recognition Period Act -- a measure that permanently extends a temporary provision that imposes a tax on a S corporation on the sale of certain property it held when operating as a C corporation for five years after the election to be treated as a S corporation.

Permanent S Corporation Charitable Contributions Act -- a measure that permanently extends a temporary provision that allows S corporation shareholders to reduce the basis of their shares by the adjusted basis of charitable contributions of property rather than the fair market value of the property.

The bill now goes to the Senate for consideration.

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