GOP senators offering bill to cement business provision in Trump tax law

GOP senators offering bill to cement business provision in Trump tax law
© Anna Moneymaker

Sen. Pat ToomeyPatrick (Pat) Joseph ToomeyDunford withdraws from consideration to chair coronavirus oversight panel GOP senators push for quick, partial reopening of economy NSA improperly collected US phone records in October, new documents show MORE (R-Pa.) on Thursday is introducing legislation to make permanent a policy in President TrumpDonald John TrumpWhite House sued over lack of sign language interpreters at coronavirus briefings Wife blames Trump, lack of masks for husband's coronavirus death in obit: 'May Karma find you all' Trump authorizes reduced funding for National Guard coronavirus response through 2020 MORE’s tax-cut law aimed at boosting business investment.

The bill would permanently extend a portion of the tax law that allows businesses to immediately write off the full costs of certain investments, which is commonly referred to as “full expensing.” This provision is currently slated to start to phase out after 2022.

Supporters of the GOP tax law argue that full expensing is one of the provisions in the measure that is the most beneficial for economic growth, and that making the policy permanent would help the economy. They argue that full expensing allows businesses to deduct the cost of investments at the time businesses pay for them.


“My bill to make full expensing permanent would give manufacturers and businesses of all sizes certainty around investment planning and it would keep our economy humming,” Toomey said in a statement.

A fact sheet from Toomey’s office pointed to a 2018 estimate from the right-leaning Tax Foundation that making the provision permanent would increase long-run gross domestic product (GDP) by 0.9 percent. 

Toomey previewed his plans to introduce his bill during a Senate Finance Committee hearing on Wednesday, during which Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump won't say if he disagrees with Birx that virus is widespread On The Money: Democratic leaders report 'some progress' in stimulus talks | Prosecutors hint at probe into 'possibly extensive and protracted criminal conduct at the Trump Organization' Democratic leaders report 'some progress' in talks with White House MORE testified. Mnuchin said during the hearing that he agreed with Toomey that making full expensing permanent would be good for the economy.

Toomey’s bill is co-sponsored by several other Republicans — including Sens. Rob PortmanRobert (Rob) Jones PortmanOvernight Defense: Pompeo pressed on move to pull troops from Germany | Panel abruptly scraps confirmation hearing | Trump meets family of slain soldier Pompeo, lawmakers tangle over Germany troop withdrawal Senate report says Russian oligarchs evading U.S. sanctions through big-ticket art purchases MORE (Ohio) and Tim ScottTimothy (Tim) Eugene ScottLobbyists see wins, losses in GOP coronavirus bill Revered civil rights leader Rep. John Lewis lies in state in the Capitol GOP plan would boost deduction for business meals MORE (S.C.), who along with Toomey played key roles in drafting the 2017 tax law.

But some progressives have criticized full expensing, arguing that it’s ineffective at boosting investment. Sen. Elizabeth WarrenElizabeth WarrenCuba spells trouble for Bass's VP hopes Democrats want Biden to debate Trump despite risks Overnight Defense: Embattled Pentagon policy nominee withdraws, gets appointment to deputy policy job | Marines, sailor killed in California training accident identified | Governors call for extension of funding for Guard's coronavirus response MORE (D-Mass.) proposed doing away with full expensing in her presidential campaign proposal for financing “Medicare for All,” instead calling for businesses to be able to write off their investments “in a way that more accurately reflects the actual loss in value.”


The bill also would fix an issue with the GOP tax law that is preventing retailers and restaurants from being able to immediately write off the costs of their renovations. While the authors of the tax law intended for retailers and restaurants to be able to immediately expense the costs of their improvements, as a result of an apparent drafting error, these businesses have to write off the costs of their renovations over 39 years instead.

Mnuchin said that both Republicans and Democrats acknowledge that the retail issue was a “drafting mistake,” and that Treasury doesn’t have the ability to fix it through regulations.

“This should not be a Democrat or Republican issue,” Mnuchin said.

Stand-alone legislation that Toomey offered last year to fix the retail issue has bipartisan support. But key congressional Democrats have said they don’t want to make technical fixes to the GOP tax law without also making more substantive changes to the tax code.

--Updated at 11:26 a.m.