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What tax policy do bipartisan experts agree would boost American economic growth?

Making Full Expensing Permanent

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Challenge

To fully incentivize American companies so they continue to make private investments, update infrastructure and purchase new equipment.

Solution

Congress can make “full expensing” permanent, which will promote investment, spark economic and job growth, and strengthen the American international competitiveness.

What is Full Expensing?

A commonsense tax policy with a history of bipartisan support that allows businesses of all sizes to deduct the full value of expenditures they make investing in new equipment or infrastructure - and one that Congress can make permanent. The nonpartisan Congressional Budget Office projects full expensing's scheduled expiration would slow economic growth.

Full Expensing Delivers on 3 Promises

1

Driving American Competitiveness

Capital expenditures encourage investment in technology and infrastructure that strengthen our nation's ability to compete in the global market.

2

Promote Economic Growth and Job Creation

Capital expenditures create jobs, raise wages and have a beneficial ripple effect across our communities and to the overall U.S. economy.

3

Protect the American Economy

Some form of this bipartisan policy has provided much needed certainty to American businesses operating during turbulent economic times over the last two decades.

Why make full expensing permanent

Wharton School of Business assessment

“Manufacturing plants that used [full expensing] increased investment flows by 15.8% relative to those that did not do so.” Additionally, plants that used full expensing policies “had a relative employment increase of 9.5%.” between 2001 and 2011.

2021 Georgetown University study

With full expensing in place, states "saw, on average, 21.5 percent higher levels of capital expenditure and five percent higher compensation for workers in their manufacturing sectors." The study concluded full expensing "provides significant and immediate economic benefits that justify making it a permanent tax policy."

Congressional Budget Office Economic Outlook

The Congressional Budget Office predicts the scheduled expiration of full expensing will slow economic growth.

Facts and Figures

Full Expensing has short run benefits

Cumulative increases in the level of fee employment over the first 5 years of enactment

2020

44,200

2021

74,900

2022

115,500

2023

153,500

2024

188,800

Source: Tax Foundation, General Equilibruim Model, November 2019

Learn More: News, Resources and Reports

Sort By

Article

How Expensing Benefits Manufacturers

Tax Foundation | September 30, 2024

Op-Ed

A Change in Tax Policy is Harming Farmers. The Senate Can Fix It.

Economic Investment Alliance | March 25, 2024

Op-Ed

Congress Can't Let Business Costs Go Even Higher

Economic Investment Alliance | March 25, 2024

Op-Ed

The U.S. Senate is one vote away from propelling small business growth

Economic Investment Alliance | March 19, 2024

Full expensing in action

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HNTB Corporation

Detroit & East Lansing, Michigan
December 2022

Missouri-based national provider of engineering services for transportation infrastructure projects, HNTB Corporation, is expanding in Detroit and East Lansing. The project is expected to generate a total capital investment of $922,203 and lead to 165 engineering jobs.

Worker with helmet checking out equipment

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December 2022

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April 2022

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Resources + Background

Action Plan

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Bipartisan Support for Full Expensing over the Years

“

When it comes to, for example, the proposal we put forward to accelerate depreciation for business . . . that would then encourage a lot of businesses to get off the sidelines..."

Former President Barack Obama, November 2010

“

The importance of depreciation and investment tax credit provisions in determining the level and composition of investment is widely recognized.”

Former NEC Director Larry Summers, 1987

“

Full and unlimited expensing may be the single most pro-growth provision in tax reform because it is all about driving productivity and investment, which really drives wages in the U.S. economy.”

Former Rep. Kevin Brady (R-TX), May 2017

“

If Congress had just made 50 percent bonus depreciation for equipment permanent that would have raised the level of GDP by 0.3 percent in 2027. Moreover, making bonus depreciation permanent would have had cost one-sixth as much so if you look at the estimates reflecting crowd out then bonus depreciation would have been even better at 0.3 percent of GDP as compared to 0.2 percent of GDP for the law that Congress passed.” (comparing the impact of the 2017 tax law to the impact of bonus depreciation)

Former NEC Director Jason Furman, March 2018

“

The end of the COVID-19 pandemic is in sight, and Congress should enact policies that enable workers and job creators to propel our economic recovery. Allowing businesses to immediately write off purchases of new equipment was one of the most pro-growth features of the 2017 tax reform law. Capital investment grew and workers became more productive, resulting in more jobs and higher wages. Our legislation will make full expensing permanent, providing manufacturers and businesses of all sizes with more certainty regarding investment planning and growth."

Former Sen. Pat Toomey (R-PA), April 2021

“

Expensing – the immediate deduction of 100 percent of the cost of investment in qualifying equipment – is an important provision that should be made permanent and extended more broadly. Expensing lowers the cost of capital and provides strong incentives for business investment.”

Douglas Holtz-Eakin, President of the American Action Forum, February 2020

A coalition to promote growth in america

Companies large and small are investing in the U.S. through new infrastructure projects and building innovative solutions to tomorrow’s problems. These investments in the American economy are made possible by policies like full expensing.

Extending the policy would benefit the U.S. economy and businesses investing in American communities.

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