Congress to finalize budget this week.
What’s in it for small business?
Dec. 15, 2015
By Mark Riso, PHCC Director of Government Relations
Congress has until tomorrow to pass a budget package or shut down the government. While most believe the deadline will be met, lawmakers are negotiating controversial policy issues that would, in theory, be attached to the massive $1.1 trillion funding bill.
From gun control and Syrian refugees to credit for research and development and extensions of the child tax credit, the House and Senate have their congressional hands full. PHCC member companies have something in play as well: small business expensing. The small business expensing provision will be extended, but PHCC has been advocating for a permanent extension. Three offers are on the table regarding small business expensing: a one-year, a two-year, or a permanent extension.
Small business expensing allows business owners to immediately deduct the cost of a qualified investment in the year that it is purchased rather than being forced to depreciate the cost of the investment over time. Since 2003, Congress steadily has increased the amount of investment that small businesses can expense from $25,000 to $500,000. Support for this expansion has been long-standing, bipartisan, and widespread. Legislation expanding and/or extending small business expensing has been enacted nine times, across two Presidential Administrations and six Congresses, under both Democratic and Republican leadership. These higher expensing limits were temporary, however, and, at the beginning of this year, they again reverted to $25,000 and will remain there unless Congress acts.
Small business expensing gives business owners the ability to maximize investment in their companies during years when they have positive cash flow. This provides an incentive for small business owners to reinvest in their businesses, which fuels expansion, growth, and jobs. This is particularly important for small businesses because they are more sensitive than larger firms to problems related to cash flow and are more reliant on earnings to finance new investments.
PHCC National will keep you updated, as negotiations are about complete.