U.S. Sen. Pat Toomey (R-PA) recently introduced the Accelerate Long-Term Investment Growth Now (ALIGN) Act, which would make permanent the full and immediate expensing provision of the 2017 Tax Cuts and Jobs Act.
The provision allows businesses to deduct the full cost of certain expenses immediately. Under current law, full expensing begins to wind down at the end of 2022.
“Tax reform’s most pro-growth feature was allowing businesses to immediately write off purchases of new equipment,” Toomey said. “It led to workers becoming more productive, which resulted in higher wages and more jobs. My bill to make full expensing permanent would give manufacturers and businesses of all sizes certainty around investment planning and it would keep our economy humming. I thank my cosponsors for recognizing the economic benefits of full expensing and look forward to getting this measure passed and signed into law.”
The ALIGN Act would also fix a drafting error in the tax code that prevents restaurants, retailers, and other leaseholders from taking full advantage of the expensing rules, according to Toomey.
According to estimates from the Tax Foundation, Toomey noted, permanent full expensing could increase overall GDP by 0.9 percent, wage growth by 0.8 percent, capital stock by 2.2 percent, and full-time equivalent jobs by 172,300.
“The expensing of asset purchases provision in the Tax Cuts & Jobs Act has made the purchase of productive equipment more affordable for my company,” Guy Berkebile of Guy Chemical Company in Somerset, Penn. said. “We have furnished a new laboratory, purchased equipment needed for production, and conserved precious cash in the process. The net result has been a 30% gain in sales and 29 new jobs in the first year. And just as important, sets us up with the manufacturing capacity required for future growth.”