Economic Investment Alliance logo
Visit our FacebookVisit our LinkedIn
X, formerly known as Twitter logo

Congress Can't Let Business Costs Go Even Higher

March 25, 2024

By Bryan Slone

Nebraska’s core industries are increasingly challenged by changes in our economic environment.   As one example, agriculture sector income is expected to fall 26% this year, down nearly $40 billion from last year, according to a recent USDA forecast. A combination of weak commodity prices, high interest rates and inflation are putting pressure on farmers here and nationwide.

Absent Congressional action, a change in tax policy will make investing in new business and farm equipment more expensive. Specifically, unless the U.S. Senate also passes a tax reform bill — that the House of Representatives has already approved — farmers and other small and large business owners will see the cost of reinvesting in their businesses spike. It’s a change that could slow economic growth, harm workers and drive-up costs for consumers. 

The policy in question is called bonus depreciation or first-year expensing. From 2018 to 2022, companies of all sizes under the Internal Revenue Code could deduct the entire cost of domestic investments in equipment and technology in the same year the purchase was made rather than wait to deduct that expense in later years. Unfortunately, a phase-out of that provision began in 2023. The Congressional Budget Office forecasts the ultimate expiration of first-year expensing will slow economic growth, meaning every business will feel the shift.  

First-year expensing stimulates economic growth. One study found that states with first-year expensing had higher levels of both investment and employment than those that didn’t. Another assessment determined first-year expensing was associated with higher wages for employees.

More broadly, anyone with a cell phone has benefited. The policy made it possible for telecommunications companies to deploy 5G technology more quickly than originally anticipated, leading to better cell service for many of us. Companies have also used it to strengthen America’s supply chains by bringing manufacturing facilities back home. 

These benefits explain why a bill extending first-year expensing passed the House of Representatives with overwhelming bipartisan support; 357 of the body’s 435 members voted to approve it.

The NE Chamber has been advocating for tax laws that assist our core industries in making substantial new technology and equipment investments to maintain our competitive capabilities in our core industries. Our Congressional policymakers can make a real difference in lowering the costs of new business investments and create better paying jobs by extending the first-year expensing provision.

Bryan Slone is the president of the Nebraska Chamber of Commerce and Industry. 

linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram