Senate Finance Committee Chairman calls for business depreciation tax reform
March 13, 2012
Senate Finance Committee Chairman Max Baucus is advocating for an overhaul of depreciation
rules for corporate capital investment, claiming that the current provisions are overly "generous."
During a hearing by his committee that examined incentives related to capital investment and manufacturing, the Montana Democrat said that accelerated depreciation is the largest business tax expenditure. In fact, provisions such as bonus depreciation and Section 179 allowed some companies to fully write off qualifying fixed asset
purchases made in 2011.
Furthermore, specialized depreciation schedules
are provided for a diverse slew of business expenses, from NASCAR racetracks to corporate jets.
In a July speech, President Barack Obama singled out the depreciation tax
loophole that allows company jets to be depreciated over a five-year period. He labeled the allowance, which provides more of an incentive to buy new planes, as "egregious."
"Faster depreciation, however, helps to offset the United States' higher statutory corporate tax rate," Baucus noted during the committee hearing. "As we work to make our corporate tax rate more competitive, we must carefully examine changes to our current depreciation system and strike the right balance."