Current Tax Reform Proposals

Published November 7, 2014

Tax Extenders

More than 50 tax breaks known as “tax extenders” expired at the end of 2013. The Senate has been unable to come to a compromise to pass a bill that would extend all of these tax extenders at once, so they are now in the process of introducing legislation that will take on some of the most prominent and business-dependent extenders on an individual basis. The tax extenders that have been introduced recently have been done so in a way to make them permanent so that businesses can effectively plan for future development. Tax reform of a more wide-ranging scope seems unlikely to make it to the president’s desk prior to mid-2015 due to a lack of bipartisan cooperation.

  1. Bonus Depreciation H.R. 4718 (also known as Accelerated Depreciation) – This provision allows companies to deduct half of the cost of some capital equipment immediately instead of spreading it out over a number of years. Legislation (H.R. 4718) to make this tax extender permanent was passed in the House of Representatives on July 11, 2014.  
  2. America’s Small Business Tax Relief Act – Similar to H.R. 4718, this act has passed the House of Representatives (on June 12, 2014) and focuses on small-business development. It allows small businesses to expense up to $500,000 in qualifying equipment per year and will be adjusted for inflation after 2014. This tax extender, if passed in current format, would be permanent. See H.R. 4457 for more.
  3. COMPETE Act – Introduced to the U.S. Senate on July 31, 2014, the goal of this act is to make the Research and Development tax extender permanent. The act would increase the credit rate to 25 percent of qualifying research investments. The idea, as with many of these tax extenders, is to make them permanent so that businesses can effectively plan for future development. 

The above legislation seems mostly likely to be voted on this year, likely after the November elections. Other legislation introduced earlier this year that had a much wider scope of tax extenders seems to have stalled due to bipartisan politics (S. 2260 Expire Act of 2014 hasn’t been acted on since it was introduced in April, and The Tax Reform Act of 2014, introduced as a draft in February, hasn’t moved any further).