Economic Growth Package Includes Small Business Incentives
The House of Representatives recently passed the bi-partisan economic stimulus package. The measure was the product of a compromise between President Bush, his administration and House leadership. The agreement is a true compromise on the part of Democrats and Republicans. There were various items on wish lists for both parties, but in the spirit of bipartisanship, many items were absent from the final package. A positive sign for small businesses are the tax cuts and incentives which were included.
The President has encouraged Congress to deliver a bill to his desk as soon as possible to bolster the economy this year. A target date of Feb. 15 has been set as the deadline for passing the stimulus package to the president's desk, before Congress takes off for the week long President’s day recess.
Bonus Depreciation: The economic growth package will provide for a 50 percent bonus deduction on new equipment in the year it is placed in service, with certain exceptions for equipment with a "long life." This temporary tax cut offers significant savings on new property with a depreciation period of 20 years or less. This will give employers – particularly small businesses – greater incentive to invest and create jobs for more Americans searching for work. The temporary bonus depreciation, coupled with expensing measures enacted in May 2003, resulted in a four percent increase in business spending in the first six months alone.
Section 179 Expensing: This provision allows employers, including small businesses, to fully expense $250,000 in both new and used tangible property in the year it is purchased up to an overall investment limit of $750,000. This will provide a particularly strong incentive for small companies to invest in their businesses so they can continue to provide good-paying jobs for the American people. This is important for U.S. construction companies which shed almost 200,000 jobs last year – about three percent of the industry's total. In December alone, 49,000 positions vanished across virtually all building trades, from home building to heavy equipment operation to specialty contracting. An economic downturn is the main contributor to the loss of jobs.
About the Author
Jessica Johnson Bennett was the Director of Government Affairs for MCAA. She has an extensive background in public affairs and government relations. Her expertise in strategic planning, PAC management and operations help on key policy issues.