WASHINGTON, Feb. 13, 2015 — The House voted to make permanent the expired Section 179 expensing allowance, but the popular tax break is likely headed to another temporary extension until Congress can agree on a broad overhaul of tax policy.
The bill (HR 636) to make the $500,000 expensing allowance permanent passed, 272-142, just shy of the two-thirds margin necessary to overcome a likely presidential veto. Democrats insist that Republicans find a way to pay for making that and other tax breaks permanent.
House Republicans are forcing votes on a series of permanent extensions of expired tax incentives, arguing that business interests and individual taxpayers need the certainty in the tax code.
Democrats, who are voting against the permanent extensions, say the Republican intent is to pass them now so that the lost revenue won't count against a broader effort to lower tax rates. The theory is that Republicans can make deeper cuts in tax rates if they don't have to simultaneously pay for offsetting the cost of the permanent extenders.
The White House has threatened vetoes of the permanent extenders because the cost isn't offset by other revenue increases or spending reductions. The Section 179 extension alone would cost about $77 billion in lost revenue over 10 years.
The $500,000 Section 179 allowance is widely used by farmers to buy tractors and other equipment, a point House Ways and Means Chairman Paul Ryan pressed Friday, citing the impact on a Case IH plant that manufactures combines in his home state of Wisconsin.
Ryan noted that the $500,000 limit for 2014 wasn't revived until Dec. 11, leaving farmers and other small businesses only days to make equipment purchases. The limit dropped back to $25,000 on Jan. 1.
“What we are simply trying to do here is produce certainty so that the men and women on the line in Racine, Wis., making Case tractors can make those tractors, and so that the dealers who are selling those tractors can sell those tractors, and so that the farmers and ranchers and the construction contractors can buy those tractors knowing that this incentive … is there,” Ryan said.
Thirty-three Democrats joined 239 Republicans in voting to make the $500,000 expensing allowance permanent.
There has been no similar move in the Senate to make the tax extenders permanent. Senate Finance Chairman Orrin Hatch's focus has been on a broader tax overhaul. Hatch, R-Utah, told Agri-Pulse he would like to make some of the extenders permanent but said he has only discussed the issue "peripherally" with the committee's ranking Democrat, Ron Wyden of Oregon.
“Frankly, we have to look at the Congress and see what we can do and work to do it,” Hatch said.
The ranking Democrat on the House Ways and Means Committee, Sander Levin of Michigan, said that Republicans had reversed their previous position on handling the extenders. Past GOP budget plans didn't propose to make them permanent “because that would mean they had to pay for them.” By advancing the permanent extensions this year, Republicans are "trying to rig the system" to make it easier to cut taxes for the wealthy, he said.
Ryan, talking to reporters after the vote, defended trying to make the $500,000 allowance permanent without the revenue offset Democrats want. "Keeping taxes where they are for people shouldn't mean you have to raise taxes on other people," he said.