The House Ways and Means Committee in a mark-up session on Wednesday approved a slate of bills to reform the tax code, including one bill that would make higher section 179 expensing levels permanent.
The bill, H.R. 636, America's Small Business Tax Relief Act of 2015, is sponsored by Rep. Pat Tiberi, R-Ohio.
First introduced last Congress, the bill makes higher section 179 expensing levels experienced through the 2010-2014 tax years permanent. This would allow farmers, ranchers and small business owners to deduct up to $500,000 in qualifying expenses with a phase-out threshold of $2 million.
With higher expensing levels, farmers and ranchers have been able to more easily justify needed investments in machinery.
"[The bill] would provide predictability for small business owners by making permanent a small business expensing measure that's been part of the tax code since the 1950s," Tiberi said in a statement. "Employers have told me over and over that this measure reduces compliance costs for small businesses, reduces the cost of capital, and improves cash flow allowing them to invest, expand, and create jobs."
Without altering the section 179 provision, the deduction level falls to $25,000. Last December, lawmakers approved a host of tax extenders that skirted the change for only the 2014 tax year. Starting Jan. 1, 2015, the expensing levels again dropped to $25,000 with a $200,000 phase-out.
These levels will not be changed unless lawmakers again approve legislation such as H.R. 636 to make the higher levels permanent or a bill to extend the higher levels for a length of time, as was approved last year.
The Ways and Means Committee also approved several other measures meant to reform the tax code, make permanent several deductions or higher deduction limits, and alter rules for S corporations.
Provisions of interest to agriculture and farm businesses included:
H.R. 641, Conservation Easement Incentive Act of 2015, sponsored by Rep. Mike Kelly, R-Pa., permanently extends the higher deduction limits and potential 15-year carry forward of conservation easement gifts.
H.R. 644, Fighting Hunger Incentive Act of 2015, sponsored by Rep. Tom Reed, R-N.Y., incentivizes businesses to contribute excess inventory to local food banks and pantries by permanently extending a food-inventory donation provision in the tax code.
H.R. 629, Permanent S Corporation Built-in Gains Recognition Period Act of 2015, sponsored Rep. Dave Reichert, R-Wash., makes permanent the reduced recognition period for built-in gains of S corporations.
H.R. 630, Permanent S Corporation Charitable Contributions Act of 2015, also sponsored by Reichert, makes permanent certain rules regarding basis adjustments to stock of S corporations making charitable contributions of property.
Members of the Committee voted along party lines, with Republicans supporting the measures and Democrats voting against them. Democrats said they were "unpaid-for extensions of tax provisions that cost taxpayers $93 billion and take the Congress in the opposite direction of comprehensive tax reform."
Many Democrats have long supported larger revamp of the tax code, and have advocated for more tax benefits for the middle class.
Appealing to that idea, Ways and Means Committee Chairman Paul Ryan, R-Wis., said in a statement ahead of the mark-up session Wednesday that "Charities, people in need, our farmers—they all deserve a tax code that's simpler, flatter, fairer—because that makes it easier to plan for the future."
For more information on section 179, visit What You Need To Know About Section 179