Farmer Iron
Making the Case for Tax Break

Making the Case for Tax Break

Manufacturer group pushes return of the expensing provision that helps farmers buy equipment.

When 2013 came to an end, so did the enriched version of the Section 179 expensing provision in the tax code that had risen to as high as $500,000. Today, the level is $25,000 and its stuck there. The increases in the provision over the years were all temporary and Congress stepped away from making the increase permanent and let it lapse back to the earlier standard.

Section 179 expensing helps farmers maximize their investment in equipment.

Congress has been looking at the provision and the Association of Equipment Manufacturers agrees something needs to be done. The group issued a statement calling on Congress to "restore the small business expensing level, also known as Section 179 expensing, to its previous $500,000 level as well as make it permanent and indexed to inflation."

The association has joined other groups that represent thousands of businesses signing a letter sent to Reps. Pat Triberi, R-Ohio, and Ron Kind, D-Wis., in support of the Section 179 expensing bill. The bill is HR 4457, "America's Small Tax Relief Act of 2014."

Section 179 was a boon to farmers who needed to upgrade equipment and technology in their operations over the years. Sure, it wasn't a bad deal for John Deere, Case IH, New Holland, Agco and others, but for farms where equipment was aging the expensing provision provided a solid investment incentive.

In the letter from AEM, the group says "allowing small business owners to maximize investing in their companies during years when they have positive cash flow gives them an incentive to reinvest, including purchasing items such as new equipment, w hich in turn accelerates economic expansion, growth and jobs."

I don't comment often here on what Congress does, but no matter your political stripe, the continued uncertainty over "what will Congress do next" has created a challenging business environment for everyone. Dennis Slater, AEM president, is quoted in the media statement: "Small businesses have been especially hard hit and still trying to cover from the Great Recession; permanent Section 179 expensing reduces uncertainty so owners can make longer-term business decisions that ensure their companies continue to grow and provide jobs."

HR 4457 is scheduled to be on the floor of the House this week, it will be interesting to see how that vote goes. In May the Senate approved a provision that would restore expensing to the $500,000 level. At a time when a little certainty is needed, Congress could step up.

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