U.S. Senator Pat Toomey (R-Pa.) and U.S. Congressman Jodey Arrington (R-Texas)
are teaming up to help ensure America’s economic recovery continues, wages keep
rising, and employers keep hiring.
Accelerate Long-Term Investment Growth Now (ALIGN) Act makes permanent
the full and immediate expensing provision of the 2017 Tax Cuts and Jobs Act.
Currently, this provision is set to begin winding down at the end of 2022.
end of the COVID-19 pandemic is in sight, and Congress should enact policies
that enable workers and job creators to propel our economic recovery,” said
Senator Toomey. “Allowing businesses to immediately write off purchases of
new equipment was one of the most pro-growth features of the 2017 tax reform
law. Capital investment grew and workers became more productive, resulting in
more jobs and higher wages. Our legislation will make full expensing permanent,
providing manufacturers and businesses of all sizes with more certainty
regarding investment planning and growth.”
no bigger incentive in the tax code for job creation and economic expansion
than allowing businesses, both large and small, to fully and immediately deduct
the cost of new investments, equipment, and machinery,” said Congressman
Arrington. “Full expensing was a critical component to the Tax Cuts and
Jobs Act, and the economic boom that ensued prior to the pandemic.
Unfortunately, this powerful provision will soon phase out, creating
uncertainty for businesses as they look to rebound from the economic fallout
and prepare for future expansion and innovation. The ALIGN Act will lower the
cost of capital and simplify the tax code as businesses look to make vital
investments, bring workers back, onshore manufacturing capabilities, and ramp
up production. This legislation will lead to stronger growth, more jobs,
increased productivity, and higher wages for working families.”
Senator Toomey in introducing the legislation in the Senate are Senators John
Barrasso (R-Wyo.), Roy Blunt (R-Mo.), Mike Braun (R-Ind.), Kevin Cramer
(R-N.D.), Ted Cruz (R-Texas), James Lankford (R-Okla.), Rob Portman (R-Ohio),
Jim Risch (R-Idaho), Marco Rubio (R-Florida), Tim Scott (R-S.C.), John Thune
(R-S.D.), Thom Tillis (R-N.C.), and Todd Young (R-Ind.).
full list of the groups supporting the ALIGN Act is available here
and the full text of the bill is available here
is Full Expensing?
The Tax Foundation
businesses calculate their income for tax purposes, they subtract their costs. This
makes sense because the corporate income tax is a tax on business profits, or
generally, revenues minus costs. However, businesses are not always allowed to
subtract the amount they spend on capital investments, such as when businesses
purchase equipment, machinery, and buildings. Typically, when businesses incur
these sorts of costs, they must deduct them over several years according to
preset depreciation schedules, instead of deducting them immediately in the
year the investment occurs. Full expensing allows for immediate deductions of
capital costs in the year the expense occurs.
year, Guy Berkebile of Guy Chemical Company in Somerset, Pa. shared
how because of full expensing, it was more affordable to purchase equipment to
make his company more productive. He furnished a new laboratory, purchased
equipment needed for production, and was able to write off the full cost of
those investments in the tax year he purchased them. As a result, Guy Chemical
Company saw a 30 percent increase in sales and created 29 new jobs.