Young, Lankford Introduce Legislation to Support U.S. Businesses
WASHINGTON, D.C. – U.S. Senators Todd Young (R-Ind.) and James Lankford (R-Okla.) introduced the Accelerate Long-term Investment Growth Now (ALIGN) Act, legislation that would make permanent a provision in the 2017 Tax Cuts and Jobs Act (TCJA) that allowed businesses to fully expense new investments, including machinery and equipment, in the year of purchase. That provision began to phase out starting at the end of 2022 and expires at the end of 2026.
“Allowing American businesses to deduct business-specific expenses is critical to growing more jobs, retaining employees, and ensuring U.S. companies are equipped to compete on an international stage,” said Senator Young. “I am proud to support this effort as it will both protect and enhance our nation’s strong business sector.”
“Business expenses are not business profits, so they should not be taxed as profits,” said Senator Lankford. “The 2017 tax law encouraged more economic activity from our US manufacturers by allowing them to depreciate their capital and equipment during the year it was purchased instead of over years and years of tax returns. But that provision started phasing out at the end of 2022. High inflation and high costs for everything from gasoline to construction materials will continue to plague our economy unless we immediately pass my bill to allow businesses to invest in their employees and business future. Let’s get this passed and signed into law to help our vital US manufacturing sector and other US industries continue to create high-paying jobs.”
In addition to Senators Young and Lankford, Senators Jim Risch (R-Idaho), Marco Rubio (R-Fla.), John Barrasso (R-Wyo.), Mike Braun (R-Ind.), Marsha Blackburn (R-Tenn.), Steve Daines (R-Mont.), John Boozman (R-Ark.), John Thune (R-S.D.), and Tim Scott (R-S.C.) also cosponsored this legislation.
Additionally, the bill is supported by the National Association of Manufacturers, USTelecom, and a coalition that includes the National Taxpayers Union, 60 Plus Association, American Consumer Institute, Americans for Prosperity, Americans for Tax Reform, Association of Mature American Citizens Action, Center for a Free Economy, Center for Freedom and Prosperity, Center for Individual Freedom, Consumer Action for a Strong Economy, Council for Citizens Against Government Waste, Independent Women’s Voice, Institute for Liberty, and Taxpayers Protection Alliance.
“The ability to efficiently finance equipment and machinery purchases is critical to the growth of American manufacturing. Unfortunately, tax reform’s ‘full expensing’ began to phase out in 2023,” said Chris Netram, Managing Vice President of Tax and Domestic Economic Policy for the National Association of Manufacturers. “The NAM strongly supports the ALIGN Act, which will make full expensing permanent. Preventing full expensing from phasing down and ultimately expiring in the coming years will ensure that small and medium manufacturers in America can meet the challenges our country faces as the industry leads the economic recovery and competes with China.”
“The Accelerate Long-Term Investment Growth Now (ALIGN) Act will bolster the effort to extend broadband to every American. Our nation’s tax policy must continue to incentivize investments, particularly at a time when America’s broadband providers are investing $86B annually into our nation’s communications infrastructure. Pro-growth policies, like full expensing, unleash the growth and innovation fully displayed by America’s broadband providers and will continue to contribute to the effort to connect every community in our nation,” said Brandon Heiner, SVP Government Affairs, USTelecom.
The coalition members said in part in their letter, “On behalf of the undersigned taxpayer, consumer, and free market advocates, we applaud you for introducing the Accelerate Long-term Investment Growth Now (ALIGN) Act, which would make permanent full and immediate expensing for American investments in machinery and equipment, also known as 100 percent bonus depreciation. Your efforts, if successful, would grow the US economy and create jobs—especially in the country’s manufacturing sector.”
Background
Bonus depreciation has been in the tax code for more than 20 years and helps drive our global competitiveness. The 2017 Tax Cuts and Jobs Act (TCJA) expanded the practice to allow businesses to immediately expense 100 percent of the cost of eligible property with a class life of 20 years of less. Under current law, the benefits began to phase out at the end of 2022. Specifically, property placed in service in the following years will see: 2023 – 80 percent expensing, 2024 – 60 percent expensing, 2025 – 40 percent expensing, and 2026 – 20 percent expensing. The ALIGN Act makes permanent full and immediate expensing for the same property as allowed in the TCJA. The ALIGN Act encourages businesses to grow and compete by fully aligning their expensing during the same year of investing in new equipment, technology, and their qualified property.