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New Tax Foundation Report: Make Full Expensing Permanent

June 26, 2023

The federal government should make full expensing, a policy that allows companies to deduct the entire cost of certain investments immediately, permanent for equipment, according to a new analysis from Stephen Entin, a senior fellow emeritus at the Tax Foundation.

Entin argues full expensing is especially important during periods of high inflation, such as the one we’re in now, writing:

Letting expensing expire and returning to depreciation now would be horrible timing. It would sharply raise the after-tax cost of machinery and equipment. Less capital would be formed, which would depress economic output, productivity, wages, and employment, falling particularly hard on workers in the form of lower wages. Consumers would see fewer goods and services. Savers and retirees would earn lower returns on investment.

Expensing is not just a counter-cyclical tool to head off a recession, only to be removed during good times. Business costs should always be fully deductible when incurred.

Read the full analysis here.

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