Two ASA-Supported Tax Provisions Included in Stimulus Package
With unprecedented speed – by Washington standards - Congress passed (and the President) signed an economic stimulus package. The new law includes two provisions that ASA supported and worked to include in the legislation: Section 179 expensing and bonus depreciation.
First, bonus depreciation allows businesses to depreciate an additional 50 percent of the cost of an asset acquired and placed into service in 2008 in that year. The types of property eligible for bonus depreciation are: (1) tangible property that has a recovery period not exceeding 20 years; (2) purchased computer software; (3) water utility property; and (4) qualified leasehold improvement property. The bonus depreciation will be allowed under the alternative minimum tax (AMT).
Regarding Section 179 expensing – the stimulus package allows small businesses to “expense” – or write-off in the year purchased - up to $250,000 of the cost of property placed in service in 2008 – double the current limit. The $250,000 limit is phased-out if total property purchased exceeds $800,000 for 2008 – up from the current $500,000. The proposal is effective for taxable year 2008.
The much-publicized rebate portion of the measure will deliver rebates - $600 for individuals, $1,200 for couples - to most taxpayers, plus an additional $300 per child. Individuals making up to $75,000 a year and couples earning up to $150,000 will get the full rebate, with those making more than that or too little to owe taxes getting smaller checks. People who paid no income taxes but earned at least $3,000 - including through Social Security or veterans' disability benefits - will get a $300 rebate.
From the beginning, ASA focused on achieving a stimulus package that will insulate our industry from the worst effects of a recession. During the time of the House-Senate negotiations over the stimulus bill, ASA’s President Jeff New and Executive Vice President Mike Adelizzi were in Washington, DC and met with ASA’s long time ally, Representative Wally Herger (R-CA). Rep. Herger is an influential member of the House Ways and Means Committee, the Committee with jurisdiction over tax issues. The ASA leaders talked candidly with the Congressman about the importance of including in the stimulus package “bonus depreciation” for investments made in 2008. ASA’s recent survey indicates this is the top issue for ASA members. Rep. Herger has been ASA’s champion on “bonus depreciation” and during the meeting we thanked him for all his efforts. He urged ASA to continue pressing the Senate to pass the House-passed stimulus package – which eventually occurred.
ASA also took part in a conference call with Barry Jackson, Assistant to the President for Strategic Initiatives and External Affairs, to discuss the status of the stimulus package. Mr. Jackson thanked ASA and other organizations for all the efforts in support of the stimulus package worked out by the White House and the House. Mr. Jackson said the President remains firmly committed to making his tax cuts permanent (including repeal of the death tax), but that he recognized this commitment could not be part of the very limited and targeted stimulus plan.